Jihadists from the Islamic State West Africa Province (ISWAP) rolled up in a dozen gun trucks at the garrison town of Dikwa late Sunday and dislodged troops after a lengthy battle.

"The terrorists in their numbers... attacked the town... just as the locals prepared to break their Ramadan fast for the day," the military said in a statement.

The soldiers withdrew to nearby Gulumba Gana town "to enable Air Component to engage" the insurgents, said the statement from army spokesman Brigadier General Mohammed Yerima.

Troops launched a counter-offensive against the jihadists on Monday and "successfully reoccupied their main headquarters in Dikwa," Yerima said.

"The retreating terrorists suffered heavy losses in both equipment and personnel including some of their key leaders," the statement said.

A military source and residents the militants had attacked the base around 1700 GMT on Sunday and stole weapons.

"The terrorists attacked on two fronts aboard several light trucks mounted with heavy machine guns," a military officer told AFP.

As the jihadists took control, residents fled into the bush and some reached the town of Ajiri, 20 kilometres (12 miles) away.

The aerial bombardment on Monday led to the killing of "several" jihadists including at least three commanders, said the military officer.

"ISWAP tactical commander Abba Moundou was fatally wounded while Elhajji Gana and Abou Ousman were killed close to Jan Gada, east of Dikwa in the aerial attack," he said.

Dikwa, 90 kms (55 miles)from the regional capital Maiduguri, is home to more than 130,000 people, including 75,000 living in camps where they relied on food handouts from aid agencies.

The town has been repeatedly attacked since residents returned in 2018, four years after they fled due to jihadist violence.

On March 1, ISWAP fighters burnt the United Nations humanitarian hub in Dikwa, a week after the militants sacked the base.

ISWAP split from the jihadist group Boko Haram in 2016 and has become a dominant threat in Nigeria.

Insurgent groups have intensified attacks since Ramadan began last Tuesday.

For several days last week the group attacked the town of Damasak on the border with Niger, killing more than 20 civilians and sending around 65,000 fleeing across the border.

The jihadist conflict which started in 2009 has left 36,000 dead and displaced two million from their homes in northeast Nigeria, according to the UN.