"Planes repeatedly bombed the Islamists' headquarters in Douentza. It was destroyed but the Islamists were not there," said one resident.

France launched the operation alongside the Malian army on Friday as the insurgents threatened to advance on Bamako after months of inactivity over a planned African military intervention to drive out the jihadists.

French Defence Minister Jean-Yves Le Drian confirmed the Islamist victory in Diabaly, which put them on the road leading directly to the capital.

"We knew there would be a counter-offensive towards the west," he said.

"They have taken Diabaly, which is a small town, after heavy fighting and resistance from the Malian army, which was insufficiently equipped at that exact point."

He earlier told journalists that while the Islamists had "retreated" in the east of Mali, French forces were facing a "difficult" situation in the west where rebels were well armed. French warplanes also attacked rebel stockpiles of munitions and fuel near Kidal, a stronghold of rebel group Ansar Dine (Defenders of Faith).

A leader of one of the Islamist groups occupying Mali's vast north vowed revenge against France, which has stepped up security on home soil.

"France has attacked Islam. We will strike at the heart of France," said a leader of the Movement for Oneness and Jihad in West Africa (MUJAO).

He issued threats against French interests in Bamako, the rest of Africa and Europe.

Another MUJAO leader, Omar Ould Hamaha, nicknamed "Redbeard", warned that France had "opened the doors of hell" with its intervention.

He also warned that France faced a situation "worse than Iraq, Afghanistan or Somalia".