the first indication of the scope of the combat in an interview Tuesday on France's BFM TV.
"It's a real war ... when we go outside of the center of cities that have been taken, we meet residual jihadists," he said Wednesday on Europe-1 radio.
Gao has been held by French-led forces since late January, and Tuesday's clashes highlight complications for the intervention.
Le Drian said French aircraft are continuing airstrikes every night on suspected militant arms depots and mine-making sites. On the ground, troops have found war materiel, weapons manuals and makeshift laboratories for making improvised explosive devices like roadside bombs.
"We discover preparations for a true terrorist sanctuary," he said.
France launched a swift military intervention Jan. 11 against Islamist extremists who had taken over northern Mali, imposing harsh Shariah laws, and started pushing toward the capital.
A UN-authorized African force is starting to take over from French forces in cities seized at the outset of the intervention.
A secular rebel movement fighting for a nation for Mali's minority Tuareg nomads claims it is holding several smaller northern towns, including the strategically located city of Kidal, on the road to Algeria. French and Chadian troops entered the city Tuesday.
Moussa Ag Assarid of the National Movement for the Liberation of Azawad said their fighters also are holding the northeastern towns of Tessalit, Menaka, Aguelhok and Tinzawatten, as well as Kidal. Azawad is what the Tuaregs call their would-be country
It was not immediately possible to verify the claims.
Trouble began in Mali, once a stable democracy in West Africa, with the latest in a series of Tuareg rebellions in the north last year. Poorly armed and demoralized Malian soldiers fled before their advance, then staged in a coup in the faraway capital, Bamako.
NMLA fighters joined up with Islamist militants linked to al Qaeda and quickly overrun all main northern cities, including Timbuktu.
But the secular fighters fell out with the Islamist extremists when they started imposing Shariah laws including amputating limbs and stoning deaths, and their rebellion was hijacked.
As the extremists have fled the French bombing campaign, it appears the NMLA fighters have moved back in. They have said they are willing to work with the French forces but not Malian troops they accuse of committing reprisals against the lighter-skinned Tuaregs and Arabs.
France and other Western governments fear the region could become a haven for international terrorists.