French and Malian forces are likely to focus on Kidal, the last Islamist rebel stronghold, after seizing the key Malian city of Timbuktu.
Kidal has been home to the head of the militant group Ansar Dine, an offshoot of al-Qaida, which joined hands with two others to take control of Northern Mali in April 2012.
Tuareg rebels announced that Kidal town has been under their control soon after the French-led forces pushed the Islamists from Timbuktu. Reports also suggest that Ansar Dine has already lost its hold over the strategic town.
The secular Tuareg rebel group National Movement for the Liberation of Azawad (MNLA) said: "We have taken control of Kidal and of the neighbouring towns of Tessalit and In Khalil. Our movement is now fully enrolled in the fight against terrorism." MNLA played a key role in the coup against Malian government last year.
The first phase of the French operation is likely to get over with the recapture of Kidal. Unconfirmed reports suggest that the Tuareg rebels have offered to help the French forces in further driving away the Islamists.
French-led forces seized control of Timbuktu and have been on a regular patrol in the streets in order to flush out the remaining militants.
"There was an operation on Timbuktu last night that allowed us to control access to the town. It's up to Malian forces to retake the town," said chief military spokesperson, Colonel Thierry Burkhard.
France is looking to swiftly pass the "baton" to African forces to drive away the rebels from Northern Mali region.
"Then the Africans can take over the baton. They are the ones who will go into the northern part, which we know is the most difficult because that's where the terrorists are hiding," said French President Francois Hollande.
Hollande also said that the French forces have been successful in the battles against the al-Qaida-linked militants over the last two weeks.
Alongside, an international donors' conference is set to take place in the Ethiopian capital Addis Ababa in a bid to raise funds for the operation in the landlocked West African nation. The African Union has called for the conference which is likely to be attended by 60 to 70 donors.
Meanwhile, the EU military training mission for Malian troops will also be decided at a conference which is due in Brussels. Prime Minister David Cameron has said that Britain is keen on providing further assistance to France in the Mali operation.