Three Nigerian soldiers were killed following a gun battle with Boko Haram insurgents in the Damasak area of Borno State on Thursday.
The insurgents were said to have moved into the town in about 13 gun trucks and attempted an attack on the military base.
The sources said seven Boko Haram fighters were killed during the attack that lasted for two hours.
Also killed was a five-year-old boy, who was hit by a stray bullet.
SaharaReporters gathered that the Borno State governor, Babagana Zulum, was in Damasak on Wednesday to distribute relief materials to displaced persons in the town.
The Boko Haram insurgency has caused over 35,000 deaths since 2009.
The terror group wants an Islamic caliphate in Northern Nigeria.
Its activities have, however, been restricted to three North-Eastern states of Adamawa, Borno and Yobe due to the efforts of security agencies.