A reconnaissance team had reached the edge of Timbuktu, and French and Malian soldiers were approaching the city "without meeting any resistance", a senior Malian officer said Sunday.
The advance came a day after French and Malian soldiers seized the town of Gao, east of Timbuktu -- the biggest victory so far in their operation against the militants, who have controlled the north for 10 months.
France's defence ministry said one of its armoured battalions and Malian troops were headed toward Timbuktu, an ancient trading post and centre of Islamic learning, where 333 revered Muslim saints are believed to be buried.
A French armoured battalion, Malian troops and soldiers from Niger and Chad were in control of Gao after the fighting Saturday in which "several terrorist groups were destroyed or chased to the north".
French warplanes had carried out some 20 air strikes Saturday and Sunday in the Gao and Timbuktu regions, the ministry statement added.
But a French military official denied an earlier report by a Malian security source that air strikes had destroyed the home of Iyad Ag Ghaly, the leader of armed Islamist group Ansar Dine (Defenders of the Faith).
"There have not been any strikes in Kidal region," the Islamist-held area in the extreme northeast where Ag Ghaly's home is located, the French source said.
Gao is the biggest of six towns seized by French and Malian troops since they launched their offensive on January 11 to wrest the vast desert north from the Islamists.
France launched its campaign after Islamists captured a central town and threatened to advance on the capital, Bamako, sparking fears that the whole country could become a haven for terror groups.
French-led forces took Gao from the Al-Qaeda-linked Movement for Oneness and Jihad in West Africa (MUJAO), one of the Islamist groups that seized control of northern Mali in April last year in the chaotic aftermath of a military coup.
The Islamists had last year joined forces with an alliance of ethnic-Tuareg rebels seeking an independent homeland in the north, first taking Kidal, then Gao and Timbuktu.
The Islamists quickly sidelined the Tuaregs, imposing a harsh version of Islamic law which saw offenders flogged, stoned or executed.
Militants also banned music and television, forced women to wear veils and destroyed ancient religious shrines in the World Heritage site of Timbuktu.
'We have the feeling we will soon be liberated'
Residents fleeing Timbuktu were jubilant in the face of the French advance and denounced the regime the Islamists had imposed on them.
"They beat us up when we smoked or listened to music," said Amadou Alassane Mega, a young student. "They will have to pay for what they did to us."
The UN said 9,000 people had fled Mali since the launch of the French campaign, bringing the total number of refugees to 150,000, while about 230,000 are internally displaced.
At an African Union summit in Addis Ababa where leaders discussed increasing troop numbers for an African intervention force in Mali, outgoing chairman and Benin President Thomas Boni Yayi criticised the AU's slow response.
France's action, he said, was something "we should have done a long time ago to defend a member country".
United Nations chief Ban Ki-moon told the summit he was determined to help the people of Mali, but also urged the country's transitional administration to make a full return to democracy.
Defence chiefs from West African regional grouping ECOWAS agreed Saturday to boost their troop pledges for Mali to 5,700. Chad, which is not a member of the 15-nation bloc, has promised an extra 2,000 soldiers.
France said Sunday it had now deployed 2,900 troops and that 2,700 African soldiers were on the ground in Mali and Niger.
French Prime Minister Jean-Marc Ayrault appealed for more aid for the Mali effort. Each country "can contribute, according to its means, to help this country and those in West Africa which are coming to its aid," he said.
Paris-based media watchdog Reporters Without Borders meanwhile called on the French and Malian authorities to let journalists cover the conflict freely, complaining that correspondents had been kept away from the fighting.
"In war time, it is up to journalists and their news organisations, not the military, to determine the risk they are prepared to take in order to gather information," said an RSF statement Sunday.