"The government has taken over Jowhar. I can see government troops on top of armoured vehicles chasing Islamists troops... heading towards Mogadishu," said resident Mahamud Ismail, from the town 90 km (56 miles) north of the Islamist-held capital.
|An Islamist fighter killed in the fighting between the Islamic courts and the Ethiopian backed Government of Somalia.|
Residents came out of their houses and cheered pro-government troops, backed by Ethiopian tanks, in pursuit of Islamists as sporadic fire echoed in the air, witnesses said.
The capture of Jowhar came hours after Ethiopia, defending the Somali interim government, said it was halfway to crushing the Islamists, heightening fears its next step would be to use airstrikes and ground troops to seize the capital.
The Islamist fighters appeared to be heeding a call by senior Islamist leader Sheikh Sharif Ahmed that forces gather in the capital to prepare for a long war against old foe Ethiopia.
"Most of our troops should converge in and around our bases in Mogadishu and should prepare for a very long war against our enemies," he told reporters late on Tuesday.
A week of mortar duels between Islamists and the Ethiopian-backed secular government has spiralled into open war that threatens to engulf the Horn of Africa, possibly attracting foreign jihadists and triggering suicide bombings.
Ethiopian Prime Minister Meles Zenawi said his forces had killed up to 1,000 Islamist fighters, although there was no independent verification.
The Islamist say they have killed hundreds.
More than 800 people had been wounded and thousands were fleeing the combat zone, according to the Red Cross.
The United Nations has warned the displacement could trigger an aid crisis in a region already struggling with the aftermath of severe flooding and limited resources.