Al-Qaeda linked Somali fighters have vowed to intensify their war against the government and African Union troops, despite the fall of a key stronghold.
Thousands have fled the town of Afgoye after government and African Union forces launched an operation several days ago, culminating in the town's capture on Friday.
"God willing we will continue the war and we will win the battle without doubt," said Sheik Abdiaziz Abu Musab, spokesman for the hardline al-Shabab, on Saturday, 24 hours after AU and Somali troops said they had taken the former strategic rebel base.
The bulk of al-Shabab fighters in the town left ahead of the planned assault by government and AU soldiers.
Columns of troops backed by tanks launched the long-awaited attack on Afgoye four days ago, marching northwest 30km from the capital Mogadishu to the town, an area crowded with displaced people.
The loss of Afgoye is another major blow to al-Shabab, which has been on the backfoot for several months. The group says, however, that it "killed many soldiers in the recent fighting" and that the withdrawal from Afgoye was a tactical retreat.
"The mujahedeen fighters tactically withdrew from some positions but that does not represent a defeat," Musab added. "We have already cut their supply routes and inflicted heavy losses on the enemy."
More than 400,000 people were living in the Afgoye region at the beginning of 2012, making it the world's largest concentration of displaced people, according to United Nations figures.
The area is dotted with impoverished settlements made of plastic and rags. Last year, the region was gripped by famine, but aid workers were unable to access it due to restrictions put in place by al-Shabab.
"We don't know what is next but for now, AU and Somali troops are controlling the the town," said Afgoye resident Abdirahman Diriye, who reported the area was calm, but that two civilians were killed by unknown gunmen on Friday night.
"If the situation continues to be calm like it is now, life will continue to be normal," said Ahmed Saney, another resident. "But if attacks start, I think many people will flee Afgoye."
Sporadic gunfire and the occasional sound of artillery shells was reported early on Saturday in the Elasha and Sinka-Dehr districts, between Afgoye town and Mogadishu. Government army commanders said they were battling al-Shabab fighters.
"The troops are in full control of the whole Afgoye corridor, but there are a few desperate militants stranded near Elasha, and soon they will be eliminated if they fail to surrender," said Colonel Muktar Mohamed, a Somali military commander.
Somali army officials rejected claims that heavy casualties had been inflicted on them.
Civilians flee to capital
Civilians, meanwhile, continue to flee in large numbers towards Mogadishu, despite security restrictions on the road, witnesses say.
The UN refugee agency reported that over 9,000 civilians had arrived in the capital.
"There is some gunfire and shelling but not major fighting," said Hassan Mohamed in the Afgoye area. "The remaining families are moving from the area today even though transport movement is limited."
Cat Carter, a communications manager with UK-based aid group Save The Children, said that she had seen refugees arriving in Mogadishu who were "absolutely exhausted".
"I saw for myself the conditions that these new arrivals from the Afgoye corridor are in. Some of them had been running for hours with small children, carrying whatever belongings that they can, and running full pelt for Mogadishu, running away from the bullets and the shells in Afgoye corridor," she told Al Jazeera.
"They're terrified about what the future holds. Mogadishu is already overcrowded. I was in [a refugee camp], and there are families living on top of each other. There are sometimes two families living in one tent, which means that a tent that really should only sleep two people has up to 14 people. Where are these new arrivals going to go?"
New front opens
Officials hope that the capture of Afgoye will deny al-Shebab a base from which to continue its recent spate of guerrilla attacks on the capital.
Afgoye's capture will "neutralise the area of operation and preparation" of guerrilla attacks, Augustine Mahiga, the UN special representative for Somalia, said on Friday, calling its capture "a significant military breakthrough".
On a separate front, Somali troops are reported to be pushing north towards the al-Shabab-held town of Balad, located about 35km north of Mogadishu.