Government troops in Ivory Coast have taken control of the town of Daloa - at the heart of the cocoa producing region - after several days of fighting.

The government victory, on Tuesday, is reported to have left Daloa divided, with some southern Christians backing the soldiers, and northern Muslims having welcomed the rebels.

Gbagbo chose the path of war... We are going to wage war to the very end

Rebel leader Guillaume Soro

Reuters news agency reports that residents are fleeing poor areas of the town, where government troops are searching for rebels.

Meanwhile the Senegalese Foreign Minister, Cheikh Tidiane Gadio, who is in Abidjan to try to broker a ceasefire, has said he has not given up hope of achieving peace and hopes to meet the rebels later on Wednesday.

But the rebels say they do not believe that President Laurent Gbagbo really wants peace and say they have enough supplies to fight a two-year war to overthrow him.

They have withdrawn from peace talks after receiving reports that Angola was giving Mr Gbagbo military support.

Angola has denied any involvement in Ivory Coast, despite several reports that Angolan troops and armoured vehicles were involved in the Daloa fighting.

Casualties

Daloa was quiet by morning after odd shots rang out into the night, according to a correspondent for Reuters news agency in the town.

Soldiers and paramilitary police have been seen patrolling the streets.

"The city is very calm now. When the government reinforcements came from Abidjan, they pushed the rebels all the way out of town to the north," a hotel receptionist told AP news agency.

Many are reported to have been killed in the fighting.

"The mutineers were taken by surprise, and many fell in battle," another resident of Daloa was quoted as saying by the French news agency AFP.

Mediation

Cheikh Tidiane Gadio told the BBC's French for Africa service that the negotiations would continue, and refused to believe that the military option was the only one available.

West African mediators have been waiting to hear from the rebels whether they are ready to sign a truce.

Gadio hopes to avoid further fighting

But the rebels say they do not trust President Laurent Gbagbo.

"Gbagbo chose the path of war. We have the weapons, the supplies, the ammunition to fight for two years. We are going to wage war to the very end," a rebel leader, Guillaume Soro, told Reuters.

Mr Soro, the newly named secretary-general of the Patriotic Movement of Ivory Coast (MPCI), said the rebels would not waste time on talks.

"We can't waste time with negotiations, while Gbagbo is taking advantage to reinforce his positions," he said.

He said the rebels wanted Mr Gbagbo to resign and a transitional government to bet set up so fair elections could be organised.

"Then the MPCI will step back," he said.

Ultimatum

President Laurent Gbagbo has said that his government accepts the mediators' proposals.

The plan calls for the rebels to confine themselves to barracks, with their weapons, so peace talks can begin.

The government says the rebels must disarm before talks

On Tuesday, Mr Gbagbo issued an ultimatum to the mutinous soldiers.

Mr Gbagbo, who was speaking on state television, said the government would put an end to the uprising in a week, either by talking or by fighting.

Ivory Coast is the world's largest producer of cocoa - the raw ingredient of chocolate - and the rebellion has sent prices soaring.