Witnesses reported that the Somali and AMSIOM troops fought a heavy battle outside Qoryooley in lower Shabele region before finally wresting control of the town and closing on the Shebab coastal base of Barawe.
Barawe is situated between the capital Mogadishu, seat of Somalia's internationally-backed government, and the southern port city of Kismayo, which is controlled by Kenyan AMISOM troops.
"The national army with the support of the AMISOM peacekeepers defeated the Al-Qaida affiliated militants in the lower Shabele region, today we have taken control of Qoryoley and we are moving onto other major towns where the militants are still harassing people," Colonel Mohamed Amey of the Somali army told AFP.
Witnesses also reported hundreds of residents fleeing the area to avoid being caught in the crossfire.
The UN-backed AU force this month launched a fresh offensive against Shebab bases, with the gunmen largely fleeing ahead of the assault, only to later stage guerrilla attacks.
UN envoy to Somalia Nicholas Kay has called the offensive "the most significant and geographically extensive military advance" since AU troops started operations in 2007.
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