Tuareg militants killed several Malian soldiers during clashes in the rebel bastion of Kidal on Wednesday, a United Nations source told AFP, as the insurgents claimed to have taken control of the town.
The fighting shattered an uneasy calm, which had held since the National Movement for the Liberation of Azawad (MNLA) took 32 civil servants hostage during a battle that left eight Malian soldiers and 28 rebels dead.
"The noise of gunfire has stopped... There are prisoners and deaths among the Malian army`s ranks," a source from the MINUSMA, the United Nations peacekeeping mission in Mali, told AFP, adding that the rebels appeared to have the upper hand.
Mohamed Ag Rhissa, one of the leaders of the separatist MNLA, told AFP by telephone his group had taken "control of the whole town of Kidal" and that "we have prisoners".
The fighting first broke out during a visit to Kidal on Saturday by Prime Minister Moussa Mara, whose government is backed by French soldiers who have helped dislodge rebels and armed Islamic extremists from the restive desert north.
The government has said that the MNLA is being backed in Kidal by Islamist fighters from Al-Qaeda in the Islamic Maghreb, the Movement for Oneness and Jihad in West Africa (MUJAO) and others.
"Our men are still on the ground fighting the joint forces of AQIM, MUJAO and other militants. That`s all we can say at the moment," said a Malian defence ministry source.
Alghabass Ag Intalla, secretary-general of the High Council for the Unity of Azawad, said his group and the Arab Movement of Azawad (MAA) had also playing a key role in the fighting.
"This morning, we were the first to have been attacked by the Malian army. So we took up our responsibilities. We mobilised the MNLA and MAA and together we took control of the city," he said.
The hostages were freed on Monday as 1,500 Malian troops poured into Kidal, sent to restore government control to the bastion of Mali`s Tuareg separatist movement, 1,500 kilometres (900 miles) northeast of the capital.
Mali descended into crisis in January 2012, when the MNLA launched the latest in a string of Tuareg insurgencies in the north.
A subsequent coup in Bamako led to chaos, and militants linked to Al-Qaeda overpowered the Tuareg to seize control of Mali`s northern half.
A French-led military operation launched in January 2013 ousted the extremists, but sporadic attacks have continued and the Tuareg`s demand for autonomy has not been resolved.
Tuareg separatists occupied the regional governor`s office for nine months before handing it back in November last year as part of a June peace deal that paved the way for presidential elections.
But the process deeply divided the MNLA, whose ultimate goal is the independence of Azawad, the minority Tuareg name for their homeland in northern Mali.
Up until the agreement, the Tuareg group had refused to allow any government soldiers or civil servants into the desert town.The UN Security Council said in a statement on Tuesday it "strongly condemned the violent clashes in Kidal on May 17 and 18" calling for an end to violence across northern Mali.
It also called for "sincere" peace talks and "reiterated that only a credible and inclusive negotiation process can bring long-term peace and stability throughout the country".
MINUSMA sources said several hundred people had fled their homes in Kidal to the relative safety of nearby desert camps.
Earlier Tuesday, Mali`s foreign affairs minister asked the Security Council to expand the peacekeeping mandate and efforts to disarm Tuareg rebels.
With the UN peacekeeping mission soon up for renewal, Abdoulaye Diop requested "a much more robust mandate, under Chapter VII of the UN charter" -- which allows for the use of force.
This would enable the soldiers to "deal with threats on the ground and disarmament of all armed groups, in particular the MNLA", he said.
Bamako will honour its commitments to hold "a sincere dialogue" aimed at a definitive peace agreement with the Tuareg rebels, Diop said.
But he accused the MNLA of colluding with terrorist groups, asking for Security Council condemnation.
Holding up pictures of victims of the Kidal battle, Diop said flags of terrorist groups Al-Qaeda in the Islamic Maghreb and of Ansar Dine (Defenders of Islam) were seen "flying from the vehicles of the attackers, next to those of the MNLA".
The UN`s special representative to Mali, Bert Koenders, who also participated in the video conference, said the UN "remains deeply committed to restoring Mali state authority in Kidal".
The French army announced on Wednesday it had sent 100 soldiers to Gao, the largest city in northern Mali, where 1,000 of its troops are already stationed.
