French and Malian troops have restored calm in Gao, the main city in northern Mali where heavily armed Islamist rebels launched a surprise attack on Sunday.

The troops regained control of the strategic city on Monday, a day after Islamic fighters invaded through its harbour and fought a protracted battle for hours.

Children gather outside the heavily shelled police station in Gao on Monday. (Jerome Delay/Associated)

The brazen assault in the heart of Gao's downtown came after two suicide bombers tried to attack military checkpoints on Gao's outskirts. Sunday's assault marked the first time the jihadists had penetrated the city of mud-walled buildings since they fled two weeks ago.

Hundreds of Gao residents gathered around the heavily damaged police headquarters in the centre of the city early Monday where body parts lay strewn about. The al-Qaeda-linked militants concentrated their attack on the police centre.

"Yesterday we heard the gunfire and hid in our homes all evening," said Soumayla Maiga as he stood with friends near the rubble of the police offices. "We were stunned when we came out and saw what happened."

The radical Islamic fighters from the Movement for Oneness and Jihad in West Africa, or MUJAO, had ruled Gao for nearly 10 months before they were ousted at the end of January.

Jihadists armed with automatic rifles

The black-robed jihadists, armed with AK-47 automatic rifles, returned to the city by crossing the Niger River in wooden boats to launch their assault Sunday afternoon, said French Gen. Bernard Barrera, citing the Malian military. The gun battles lasted more than five hours.

By nightfall French military helicopters flew overhead to patrol the city. Two explosions rang out overnight but early Monday the only sounds in the city were the morning call to prayer and barking dogs.

Malian Lt. Col. Nema Sagadam said that it was unclear how many jihadist fighters had penetrated the city in Sunday's attack, though at least 10 were killed by Malian forces.

Malian soldiers fired on the police building because the radical Islamic fighters were hiding inside, she said.

"We used heavy arms to attack the building because it was infested with militants who were firing at people," Sagadam said.

The walls and ceiling inside the police building were heavily stained with blood and the damage was consistent with an explosion, suggesting a suicide bomber may have blown himself up inside the police offices during the fighting.

Residents who had cowered in their homes during the heavy gunfire cautiously ventured out onto the streets where groups in circles looked at the human remains.

Women used their veils to cover their noses and mouths as they passed two blown off legs lying in the sand. The remains of a disemboweled donkey also were in front of the police building.

Two civilians died from gunshot wounds, while 10 others were wounded, according to Dr. Moulaye Djiteye at the Gao hospital. The body of a third man was carted away later Monday morning; residents said he had been hit by a stray bullet while riding by on his motorcycle.

Ten other people were treated for their wounds at the hospital, Djiteye said.

Islamic militants had previously clashed with Malian forces on the outskirts of town, but Sunday's attack was the first time of fighting in the city centre.

The dramatic attack Sunday highlights the challenges ahead for the Malian and French forces, who initially drove the militants out of the city after facing little resistance.

While the suicide bombers have not killed anyone other than themselves, residents said at least one of them had been living in a known jihadist hideout for seven months. The house where the young man stayed also had been visited by the one-eyed Algerian terror leader Moktar Belmoktar, who was the architect of last month's attack on a BP plant in Algeria in which at least 37 people were killed.