Tuaregs and Ansar Dine Mujahideen fighters agreed on Saturday to join forces and set up the Islamic State of Azawad in liberated northern territories of former Mali.
The two groups that liberated Mali's north have announced that they have agreed to merge and create the independent Islamic State in the northern half of the former west African country.
The merger, announced on Saturday, would see the Tuareg-led National Movement for the Liberation of Azawad (MNLA), and Ansar Dine Mujahideen fighters join forces to control the new country of the size of France.
"I have just signed an accord that will see an independent and Islamic state where we have Islamic Law", Alghabass Ag Intalla, a commander of Ansar Dine, said on Saturday.
Ansar Dine is accused by Western crusaders of being linked to al-Qaeda in the Islamic Maghreb.
The Saturday evening agreement was signed in the northern town of Gao, with celebratory gunfire in both Gao and Timbuktu, another town under their control, marking the development.
In Timbuktu, the last major town in Azawad to fall to fighters from the two groups, the NMLA took over the local airport, located on the outskirts of town, while Ansar Dine installed itself in the military camp at the centre of the city.
The agreement suggests both sides have made a major concession in talks that have been going on intermittently for weeks.
The proclamation of the Islamic State of Azawad will likely increase the chance of the groups reaching their goal and will enable them to combine their fighters.
The north of Mali fell after a coup d'etat in the capital Bamako on March 21 left puppet government forces disorganized and lacking motivation to fight.
The puppet "transitional government" of Mali says it wants to take back captured territory but has so far been too distracted by issues of restoring political stability in Bamako to focus its attention of the issue of the north.