* French, Malian forces encircle central town of Diabaly
* Islamists kidnap dozens of foreign workers in Algeria
* African states say sending at least 2,000 troops
French troops launched their first ground assault against Islamist rebels in Mali on Wednesday in a broadening of their operation against battle-hardened al Qaeda-linked fighters who have resisted six days of air strikes.
France has called for international support against the Islamist insurgents it says pose a threat to Africa and the West, acknowledging it faces a long fight against the well-equipped fighters who seized Mali's vast desert north last year.
After Islamist pledges to exact revenge for France's intervention, militants claimed responsibility for a raid on a gas field in Mali's neighbour Algeria.
Mauritanian media said an al Qaeda-linked group claimed to have seized as many as 41 hostages, including seven Americans, in the attack, carried out in retaliation for Algeria allowing France to use its air space. Three people, among them one British and one French citizen, were reported killed.
French army chief Edouard Guillaud said his ground forces were stepping up their operation to engage directly "within hours" with the alliance of Islamist fighters in Mali that groups al Qaeda's North African wing AQIM with the country's home-grown Ansar Dine and MUJWA militant movements.
Residents said a column of about 30 French Sagaie armoured vehicles advanced toward rebel positions from the town of Niono, 300 km (190 miles) from the capital Bamako. With the Malian army securing the northern border region near Mauritania, Islamist fighters were pinned down in the town of Diabaly.
"Fighting is taking place. So far it is just shooting from distance," said Oumar Ould Hamaha, a spokesman for the MUJWA militants. "They have not been able to enter Diabaly."
West African military chiefs said the French would soon be supported by around 2,000 troops from Nigeria, Chad, Niger and other regional powers - part a U.N.-mandated deployment which had been expected to start in September but was kick-started by the French intervention.
"They are coming to fight and not for a parade. We are coming for battle and that is clear," said Ivory Coast's General Soumaila Bakayoko, who presided over a meeting on the regional force in Bamako.
The first 900 Nigerians would arrive on Thursday he said. Witnesses told Reuters they had seen another 200 troops from Niger waiting to cross into eastern Mali in a convoy including armoured vehicles, artillery and fuel tankers.
Chad's Foreign Minister Moussa Faki Mahamat told Radio France International his country alone would send 2,000 troops, suggesting plans for the regional force were already growing.
Military experts say any delay in following up this week's air strikes on Islamist bases with a ground push could allow the rebels to withdraw into the desert, reorganise and mount a counter-offensive.
Guillaud said France's air strikes, involving Rafale and Mirage jet fighters, were being hampered because militants were using the civilian population as a shield.
"We categorically refuse to make the civilian population take a risk. If in doubt, we will not shoot," he said.
Defence Minister Jean-Yves Le Drian acknowledged France faced a difficult operation, particularly in western Mali where AQIM's mostly foreign fighters have camps. Mauritania has pledged to close its porous frontier to the Islamists.
"It's tough. We were aware from the beginning it would be a very difficult operation," Le Drian said.
President Francois Hollande said on Tuesday French forces would remain in Mali until stability returned. However France hoped to hand over to African forces in its former colony, "in the coming days or weeks", he added.
The troops from Nigeria and other regional powers will join about 1,700 French troops involved in the operation, part of a contingent expected to reach 2,500 soldiers. France is using Harfang surveillance drones to guide its strikes and also plans to deploy Tiger attack helicopters.
A Malian military source said French special forces units were taking part in the operation.
While many French troops come battle-hardened from Afghanistan, some regional African forces may need to adjust to desert combat far removed from the jungle terrain many are used to. A contingent of some 200 EU military trainers, led by a French general, is not expected before mid-February.
With African states facing huge logistical and transport challenges to deploy their troops, Germany promised two Transall military transport planes to help fly in the soldiers.
Britain has already supplied two giant C-17 military transport planes - larger than France's five C-135 planes - to ferry in French armoured vehicles and medical supplies. The United States is considering logistical and surveillance support but has ruled out sending in U.S. troops.
Hollande's intervention in Mali brings risks for eight French hostages held by AQIM in the Sahara as well as the 30,000 French citizens living across West Africa. A French helicopter pilot was killed on Friday, France's only combat death so far.
Even before the attack in Algeria, security experts had warned that the multinational intervention in Mali could provoke a jihadist backlash against France and the West, and African allies.
The conflict in Mali also raised concerns across mostly Muslim West Africa of a radicalisation of Islam in the region.
Many inhabitants of northern Mali have welcomed the French attacks against Islamists who have imposed a harsh form of sharia law, cutting off hands and feet for crimes, and destroyed the ancient city of Timbuktu's famed shrines.
The International Criminal Court announced on Wednesday it had launched an investigation into suspected war crimes including murder, mutilation, torture, rape, and executions committed in the north.
Despite the abuses, Mahamadou Abdoulaye, 35, a truck driver who fled from the northern Gao region of Mali into Niger, said the Islamists were still managing to attract recruits.
"We were all afraid. Many young fighters have enrolled with them recently. They are newly arrived, they cannot manage their weapons properly. There's fear on everybody's face," he said.