AU and Somali troops recently took control of the port city of Kismayo
African Union and Somali troops say they have secured Wanla Weyn, a town formerly held by Islamists about 90km (55 mi) from Mogadishu.
The advance represents the latest gain by Somali and regional forces at the expense of the Islamists of al-Shabab.
The nearby Balli Doogle former air force training base was also secured.
AU and Somali troops are advancing along the route between the capital, Mogadishu, and Baidoa, which was taken by Ethiopian forces in February.
The AU peacekeeping mission, Amisom, said it had begun the 211km (131 mile) advance from Afgooye, just west of Mogadishu, to Baidoa, on Saturday.
“Securing Wanla Weyn will allow for free movement of the population who have been restricted until now, unable to go about their daily trade and business due to the restrictions of Al-Shabaab,” said Amisom force commander Lt Gen Andrew Gutti.
“It will also facilitate the provision of much needed humanitarian assistance to the local population.”
The AU said their advance would also deprive al-Shabab of illegal taxes raised in the area.
AU troops pushed al-Shabab from the capital, Mogadishu, in August 2011.
Along with other pro-government forces, they have since secured most of the other towns previously in militant hands.
Earlier this week, Somali and AU forces took control of the port city of Kismayo, al-Shabab’s last major stronghold.
However, al-Shabab fighters are still highly active in much of the countryside in southern and central Somalia and have carried out suicide bombings and other attacks in cities they no longer control.
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