Rebels have seized control of the town of Birao in the Central African Republic.
Military and rebel leaders say fighters from the rebel Convention of Patriots for Justice and Peace attacked the town Wednesday, forcing government soldiers to retreat.
Defense officials say the soldiers withdrew to avoid civilian casualties. They say the army is planning a counter-attack.
Reports from the area say most of the population has fled into the bush.
Birao is located in the far northern Central African Republic, near the borders with Sudan and Chad. The town was under the protection of a Chad-based U.N. peacekeeping force until 10 days ago, when the mission's mandate came to an end.
The CPJP has attacked Birao and other towns in the C.A.R. in the past, as part of efforts to unseat President Francois Bozize.
Some information for this report was provided by AFP and Reuters.