The West African peacekeeping force, Ecomog, says rebels in Sierra Leone have been pushed out of Port Loko, 50km north-east of the capital, Freetown.
A spokesperson for Ecomog said their forces, backed by Nigerian warplanes, drove the rebels from the town on Thursday.
Local reports said hundreds of rebels attacked Port Loko on Wednesday, seizing parts of the town, while Ecomog forces held other parts.
According to Sierra Leone's Information Minister, Julius Spencer, Port Loko was reclaimed with the help of local militia.
Mr Spencer said the rebels were still holding the town of Lunsar, east of Port Loko.
Nigeria, which supplies most of the Ecomog troops, sent thousands of reinforcements last week to swell the force estimated at 15,000 which is already in Sierra Leone.
Our correspondent in Freetown says the war still has the capacity to spread.
As well as attacking a barracks and an airstrip outside the capital on Wednesday, the rebels have taken a string of towns in the centre of the country.
By Friday, the Nigerian-led forces had regained control at the Freetown barracks and airstrip, helped by local tribal militia known as kamajaws.
According to the correspondent, the rebel attack frightened the local population into staying at home on what would normally have been a popular New Year's Day Bank Holiday.
The United States has laid much of the blame for the continuing insurgency in the country on Liberia.
While Liberia denies official involvement, the government there says paid Liberian mercenaries may be helping the rebels.
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