Dozens of militant fighters stormed the Yobe state capital Damaturu at sundown, firing indiscriminately, before they were intercepted by troops, residents said, according to AFP.
"The gunmen arrived around 7:30 pm (1830 GMT), firing guns and shouting 'Allahu Akbar!' (God is greatest)," said student Mukhtar Sani.
"Since the first attack last weekend on Baga, security forces have been actively pursuing the militants," Nigeria government spokesperson Mike Omeri said in a statement.
"Security forces have responded rapidly, and have deployed significant military assets and conducted air strikes."
At least 100 people were killed when Boko Haram attacked Baga last weekend, according to the district head.
Omeri added: "The government of Nigeria will not rest until Boko Haram is completely dismantled.
"The government values every town, every community and every Nigerian equally. No inch of Nigerian soil will remain in the hands of these terrorists."
"All the streets are deserted. Everybody has moved indoors and all we hear are sounds of gunfire," added resident Aishatu Bala.
Witnesses who escaped to neighbouring towns and Borno state capital Maiduguri said the insurgents had razed many buildings and homes and killed dozens of civilians in subsequent raids this week.
Soldiers had fled the area after the nearby army base, which is the headquarters of a multinational force comprising troops from Chad, Niger and Cameroon, by Lake Chad was overrun.
Some 300 km away, on Friday evening, gunfire, explosions and heavy artillery fire were heard on the outskirts of Yobe state capital Damaturu.
"We can hear the artillery fire and then the ground shaking," a Reuters cameraman said.
Boko Haram has been waging a 5-year insurgency to carve out an Islamic state in northeastern Nigeria.
Government spokesperson Omeri said the National Emergency Management Agency, working with the Red Cross, was providing humanitarian assistance to 2,000 people who had fled Baga.
Some 2,000 more people crossed the border to Chad over the last week, prompting the country to call for international aid.
Cameroon has also appealed for aid to help fight the militants.
The UN refugee agency said on Friday that 7,300 refugees had arrived in western Chad in the past 10 days after the Baga attack and surrounding villages, taking the number of refugees to more than 10,000.
Security analysts this week said that the militants were now in a better position to strike south towards the Borno state capital, Maiduguri, where the group was founded in 2002.
It has also cast doubt on the ability to hold general elections in the affected areas, scheduled for next month.
Andrew Noakes, co-ordinator of the Nigerian Security Network of analysts, said the assault on Baga may have targeted civilian vigilantes assisting the military after a series of previous strikes.
"Boko Haram had pledged to punish CJTF (Civilian Joint Task Force) members and it looks likely Baga was treated with such brutality to do exactly that, and to send a message to other vigilantes," he said.
Friday evening's attack in Damaturu was an apparent reprisal for a raid on Tuesday by civilian vigilantes and local hunters on a Boko Haram enclave in Gujba, 40 kilometres (25 miles) to the south.
Several militants were killed and weapons seized, according to a security source in the city.
Boko Haram then killed 25 people and abducted women in Kadarko, 20 kilometres away, before burning the entire village, local vigilantes sources said.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ