The fall of the provincial capital, even temporarily, highlights the stubborn insurgency's potential to expand beyond its rural strongholds in the south of the country.
Afghan forces, hindered by the slow arrival of reinforcements but backed by limited US air support, struggled to regain control of the city after three days of heavy fighting.
But today troops managed to reach the centre of Kunduz where the streets were littered with Taliban bodies, residents told AFP, adding that fighting was still ongoing in parts of the city.
Deputy Interior Minister Ayoub Salangi said the city had been recaptured after a "special operation" overnight.
Local residents reported deafening overnight bombardments, adding that the Taliban were still resisting Afghan forces in some parts of the city.
But some scenes of jubilation erupted around the city square where local residents, who suffered three days of crippling food shortages, thanked government troops.
"Afghan soldiers took down the white-and-black Taliban flag in the city square and hoisted the government flag," Kunduz resident Abdul Rahman told AFP.
Security officials said the militants had slowly infiltrated Kunduz during the recent Eid festival, launching a Trojan Horse attack that enabled them to capture it within hours on Monday.
The development coincided with the first anniversary of Ashraf Ghani's national unity government.
Marauding insurgents seized government buildings and freed hundreds of prisoners, raising their flag throughout Kunduz.
The lightning capture of the city sent thousands of panicked residents fleeing as insurgents erected checkpoints across the city and were seen racing vehicles stolen from the police, UN and Red Cross.
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