Continuing their drive northward, columns of heavily-armed militia aboard machine-gun equipped pick-up trucks - known as "technicals" - captured the towns of Jowhar, about 90 kilometers (55 miles) north of capital Mogadishu, and Mahhadei Uen.
The Islamic militia captured Mogadishu earlier this month.
Islamic courts chief Sheikh Shariff Sheikh Ahmed immediately imposed a dusk-to-dawn curfew in Jowhar and told his fighters to shoot dead anybody found looting.
"We did not come here to earn money or claim power, but to make you safe and secure," he told a crowd of local resident as hundreds more Islamic fighters shouting "Allah Akbar" - "God is Great" - continued to enter town.
Doctors at local hospitals in both towns said eight people had been killed and around 20 wounded in the battles, with residents saying the toll was lower than previously feared since civilians had had time to take cover.
"We have captured Jowhar and we are now planning to establish a new administration and establish Sharia courts as soon as possible," said Sheikh Hassan Dir, one of the Islamic militia commanders.
In addition, the Islamists arrested two top alliance commanders, Hassan Bhisow and Osman Dheere, whom were later questioned.
Frightened residents respect curfew
By the time the curfew took effect, thousands of residents - many fearing reprisals - had returned to their homes, leaving the Islamic militia to patrol the township, an AFP correspondent said.
Residents said the Islamists, who now control a large part of Mogadishu, had been well-prepared to seize Jowhar from warlord Mohammed Dheere, a member of the US-backed Alliance for the Restoration of Peace and Counter-Terrorism (ARPCT).
Mr Dheere was reportedly in Ethiopia when Islamic militants entered Jowhar, host to a United Nations office and other international aid agencies working in the shattered African nation. Most international staff were evacuated last week.
Meanwhile, the Somali transitional parliament, sitting in the regional Baidoa township, approved the deployment of peacekeepers, deepening rifts with the courts, whose fighters have vowed to kill foreign troops entering Somalia.
Several warlords had already fled on Tuesday night ahead of the fighting.
Mohamed Afrah Qanyare and Issa Botan Alin and a little-known local chieftain, Abdu Nure Said, left Jowhar and headed further north to Qanyare's hometown in the central Somali region of Galgudud.
Mr Qanyare was widely regarded as the most powerful of the warlords, but his large stockpiles of military hardware failed to deter the Islamic courts, which have been accused of receiving support from foreign fighters.
In northern Mogadishu, warlords Musa Sudi Yalahow and Bashir Raghe Shirar ditched the floundering alliance and said they would support their separate clan-based version of Islamic courts, effectively ending the short-lived tenure of the alliance.
Warlord Abdi Hassan Awale Qeydid quit the ARPCT on Tuesday night, but there was no word from militia chief Omar Muhamoud Finnish.
Restrictions imposed
On Tuesday, east African countries imposed travel bans and froze bank accounts of the warlords and recommended they be prosecuted for crimes against humanity at an international tribunal, but most then dismissed the action.
Since the fighting erupted in February, nearly 360 people have been killed and more than 2,000 others wounded, many of them civilians as the Islamic courts battled to oust the warlords who have ruled Somalia for 15 years.
The warlord alliance was created in February with US support in a bid to curb the growing influence of the Islamic courts, hunt down the extremists they are accused of sheltering and disrupt feared plans for new terrorist attacks.
It was not clear whether the warlords had accepted ultimate defeat or would regroup and attempt to reclaim their territories.
Jowhar, once a temporary seat of the Somali transitional government, fell a day before members of the new Somalia Contact Group formed by the United States prepared to meet at UN headquarters to discuss the future of Somalia, a nation of 10 million.
The United States said on Wednesday it was prepared to work with "all parties" to establish peace in Somalia.
"The United States is ready to work with all parties to seek a peaceful solution and the reestablishment of effective governance in Somalia," State Department spokesman Sean McCormack said in a statement.
A US official said the United States, Britain, Norway, Sweden, Italy, Tanzania and the European Union would be represented at the Somalia Contact Group meeting at Norway's UN mission.