Rebels waging an offensive in the Central African Republic seized the major north-central town of Kaga-Bandoro on Tuesday, a military source said, bringing them a little closer to the nation's capital Bangui.
A rebel coalition known as Seleka, which began its offensive on December 10, have said it does not want to march on the capital.
But the fighters, who are calling on the government to respect various peace accords signed between 2007 and 2011, are gaining ground, meeting little resistance as they push south.
Bangui sits on the border with the Republic of the Congo and the Democratic Republic of the Congo.
A military source in Bangui said Central Africa's President Francois Bozize had met with military officials to discuss the situation.
In the market town Kaga-Bandoro, rebels arrived "in vehicles and on motorcycles, and started using heavy weapons to fire at strategic points: a military base, police stations, the customs office," said a military source in Sibut, about 130 kilometres (80 miles) south.
"Members of the Central African armed forces resisted briefly then began to retreat towards Sibut," he added.
"A large part of the population took cover in their homes when they heard the explosions, and many residents fled in the direction of neighbouring villages," the Sibut military source added.
Kago-Bandoro is the fourth regional capital to be attacked and occupied by rebels, who have been pushing south from Ndele near the border with northern neighbour Chad.
The Central African army is ill-equipped, under-paid and poorly organised and has offered scant resistance to the rebels. Government troops even their stronghold in Bambari, in the south-central Ouaka region, in just a few hours on Sunday.
Last week, soldiers from Chad entered the country at Bangui's request to help the army contain the rebel offensive. The Chadian army helped Bozize during previous rebellions in the north of the country in 2010.
But the troops have said they are a peacekeeping force and have not opposed the rebels' swift advance.
The most recent attack comes after the government on Monday said it was prepared for dialogue, but only when the rebels had withdrawn from occupied towns.
On Friday, central African heads including Bozize met in Chad capital N'Djamena and proposed immediate dialogue.
On Monday, the Seleka rebels said they were open to talks and called on Bozize for a ceasefire as a condition for negotiation. They refused to pull back from their positions.
Bozize seized power in a 2003 coup.
The Central African Republic is a mineral rich, landlocked country with less than five million residents. It ranks 179 out of 187 countries on the UN's latest development index and has seen frequent coups and mutinies.© ANP/AFP