Nigerian troops on Sunday engaged Boko Haram fighters in a fierce battle in Maiduguri, the military, vigilantes and residents said.
“Troops are repelling a simultaneous attack on Monguno and Maiduguri by terrorists,” the defence headquarters said on Twitter.
It said an air and land operation was going on against the Islamists, adding that a curfew had been imposed on the embattled city which has been the epicentre of the six-year-old Boko Haram insurgency.
Fears have been growing for months about a possible strike on Maiduguri after the Islamist militants began seizing towns and villages in three northeast states about six months ago.
On January 3, they captured the fishing hub of Baga, in the far north of Borno State, which security analysts said put them in a better position to strike south to hit Maiduguri, the state capital.
Locals said fighting was on-going and that the extremists first attacked Jintilo settlement on the outskirts of the city around 5:00 am (0400 GMT).
But they met stiff resistance from troops stationed in the village, just five kilometres (three miles) from Maiduguri, where Boko Haram was founded in 2002.
“Fighting is still going on since 5:00 am at Jintilo between Boko Haram and soldiers. We have all evacuated our homes,” said Mustapha Zaraye, a resident of a housing estate near the scene.
“More soldiers are deploying to Jintilo,” he added.
Residents on the southern outskirts of the city moved out of their homes and poured into the city as fighting raged.
“It is flying bullets everywhere. All we hear are sounds of guns and explosions,” said Buba Kyari, a resident of Moronti neighbourhood, near Jintilo.
“A rocket-propelled grenade hit and killed a person from my neighbourhood who was fleeing into the city.”
A military jet was seen overhead and began aerial bombings of Boko Haram positions, a member of a civilian vigilante group fighting alongside the troops said.
“The attackers have been subdued and are in disarray,” the vigilante added, asking to remain anonymous for security reasons.