Looking for His glorious appearing! Titus 2:13

Abuja: The leader of Nigeria's Islamist group Boko Haram said his fighters  now ruled the captured north-eastern town of Gwoza "by Islamic law", in the first video to state a territorial claim in more than five years of violent insurrection. His message also contained taunts for Western governments and compared democracy to incest.

However, the Nigerian military denied Boko Haram had taken control of the town.

Abubakar Shekau, who leads the insurgents, said in a video that the group would enforce Islamic law in Gwoza, a town of about 250,000 people, in Borno state, about 850 kilometres north-east of the capital, Abuja.

Nigerian Islamist extremist group Boko Haram video shows fighting at an undisclosed location. Photo: AFP

His forces have killed thousands since launching an uprising in 2009, and are seen as the biggest security threat to the continent's leading energy producer. 

In the video, which was released late on Sunday, the militant, who says he is fighting to create an Islamic state in religiously-mixed Nigeria, said his forces had taken control of the hilly border town of Gwoza, near the frontier with Cameroon.

"Allah has granted us success in Gwoza because we have risen to do Allah's work," Mr Shekau said, reading out a statement off a notebook, with two masked gunmen on each side of him and three four-wheel-drive vehicles behind him in thinly forested bush.

People reportedly lined up before being executed by members of the Nigerian Islamist extremist group Boko Haram. Photo: AFP

"Allah commands us to rule Gwoza by Islamic law. In fact, he commands us to rule the rest of the world, not only Nigeria, and now we have started."

"The claim is empty," Nigeria's Defence Headquarters said on its Twitter account late Sunday. "The sovereignty and territorial integrity of the Nigerian state is still intact."

Boko Haram has been intensifying its campaign of violence ahead of elections scheduled for next February. It killed more than 2000 people in the first six months of the year, according to New York-based Human Rights Watch, most of whom had died in gun and bomb attacks on villages in the majority-Muslim north.

Fighting has displaced more than 400,000 people in Nigeria. Photo: AFP

Nigeria's National Emergency Management Agency said that fighting has displaced more than 400,000 people in the nation of about 170 million.

In an attack on Sunday in the remote north-eastern town of Gamboru, the insurgents killed 15 people, survivors said on Monday. The gunmen came in armed utility vehicles, throwing explosives and spraying the town with bullets. Many fled over the border into Cameroon, witnesses said.

"They were shouting 'Allah Akbar' [God is Greatest] and were shooting sporadically," Alice Adejuwon, a businesswoman and resident of Gamboru, said. "We saw corpses on the streets as we ran out of the town."

The video includes footage of what appeared to be an attack on Gwoza, showing fighters, backed by armoured personnel carriers, utility vehicles with attached machineguns, and one tank-like vehicle with track wheels and a large gun.

They unload salvos of gunfire across the town from trucks and on foot. The fighters are all armed with AK-47s or rocket-propelled grenades, some in military uniform, others in civilian clothes. 

They also fire into the hills at what appear to be fleeing security forces and civilians, and they help themselves to weapons and ammunition seized from security forces. It ends with scenes of executing captives in pre-dug mass graves, some of them beaten to death with spades.

Witnesses said Gwoza remained a battleground but that Nigerian forces had largely fled. A security source also confirmed that the insurgents were still laying siege to it.

Resident Hannatu John escaped the town during the attack, running into the hills as the rebels fired at them, fleeing eventually to the capital of Borno state, Maiduguri.

She has heard nothing of her father or sisters in the town since early last week, she told Reuters in Maiduguri.

"We are in the dark and full of despair," she said. "Nobody knows what will happen tomorrow."

Police spokesman Emmanuel Ojukwu said on Sunday that 35 policemen were missing after an attack on a mobile police training camp in Gwoza.

Mr Shekau also taunts France, Israel and the US in the video.

"Democracy is worse than homosexuality, worse than sleeping with your mother," Mr Shekau says. "You are all pagans and we will kill you, even if you do not attack us we will kill you ... Allah commands us to kill without pity."

Islamist groups across the world have become increasingly bold in making territorial claims in recent months. Sunni group Islamic State has declared a "caliphate" across large areas of Syria and neighbouring Iraq, while an affiliate of al-Qaeda said in July it aimed to set up an emirate in east Yemen, local media reported. Mr Shekau makes no mention of Islamic State in the video, although he does mention Iraq in the context of US intervention there.