This is thought to be the only image of Mullah Omar (L)
According to the Afghan Islamic Press (AIP) news agency, Mullah Omar told his troops: "I order you to obey your commanders completely. Do not move here and there ... regroup yourselves.
"Put up resistance and fight," he said.
The Taleban leader dismissed reports that he had fled to Pakistan as untrue.
Tough war
Mullah Omar made his rallying call to Taleban troops in a radio broadcast in Pashto at about 1630 local time (1200GMT), the AIP news agency said.
He warned the Taleban that they should prepare for a tough war.
Shortly before the address, reports from the opposition Northern Alliance circulated that he had fled into Pakistan.
"Do not listen to the propaganda by opposition media," Mullah Omar said. "I am in Kandahar and have not gone anywhere. This is a fight for Islam".
The areas that the Taleban have retreated from in recent days are those that are mainly inhabited by Afghanistan's Tajik and Uzbek minorities.
Now that they are restricted to their Pashtun heartland, it is unclear how the war will continue.
The BBC defence correspondent, Jonathan Marcus, says it is not clear if the Taleban have actually collapsed as a fighting force or whether they are still capable of mounting a determined defence of Kandahar and the south.
The United States has no obvious allies in southern Afghanistan equivalent to the Northern Alliance.
Moreover, our correspondent says the Northern Alliance may be unwilling to press on into largely Pashtun territory.
Islam controversy
Mullar Omar is a reclusive leader, hardly ever seen even by his closest advisers.
He is partially blind after his right eye was damaged by shrapnel when he was fighting Afghanistan's Soviet occupiers in the 1980s.
He has vigorously defended Osama Bin Laden against American allegations that he masterminded the 11 September attacks on the World Trade Center and the Pentagon, accusing the US of trying to cover up their own intelligence failures.
Mullah Omar has presided over the controversial interpretation of Islamic law under which women are banned from work and girls get no education.
Women found guilty of adultery are stoned to death, homosexuals crushed under brick walls, thieves' hands are amputated and murderers publicly executed by victims' families.
Edicts from Mullah Omar have included the death sentence for anyone converting to another religion, as well as the infamous orders to destroy the country's ancient Buddha statues in the town of Bamiyan.