Colonel Ben Ahonotu, commander of the operation against the self-styled Talibans told AFP: "We have taken over their enclave, they are on the run and we are going after them."

Residents of Customs Bridge suburb neighbouring the group's Bayan Quarters enclave said they had seen a convoy of the militants fleeing their area.

"Some members of the Talibans passed through our neighbourhood in four cars this evening," a resident Habibu Ismail told AFP on the phone from his house.

In the wake of the reported victory, the din of mortar shells and guns was stilled as dusk fell.

Earlier Wednesday, the army had boosted its numbers in Maiduguri, where rebels have been fighting security forces since Sunday.

President Umaru Yar'Adua had ordered the armed forces to crush the movement "once and for all".

"We really want to get this job done in the shortest possible time, therefore, we have received reinforcements of 1,000 troops," said a military source in Maiduguri who asked not to be named.

The soldiers were flown in from Calabar, the capital city of Cross River, one of Nigeria's southern oil-producing states.

Wednesday's fighting concentrated on enclaves of Maiduguri believed to house the sect's leader Mohammed Yusuf. The death toll from the clashes has already surged past 300 and thousands of people have been forced to flee their homes to escape the violence.

But fresh clashes were also reported elsewhere, including Yobe state where police said 43 people were killed Wednesday as troops hunted down militants in the forests.

Police had said earlier that the offensive to rout the militants was likely to take longer than previously thought, partly because civilians were still trapped in the neighbourhoods where the rebels were based.

"Therefore troops need to be cautious," he said.

As residents said it appeared that troops were now closing in on the last of the militants, rights activists counted at least 10 more bodies.

A brief phone conversation with one of the Taliban leaders, Aminu Tashen-Ilimi, was punctuated by the sounds of heavy shelling in the background and chants of Allah Akbar (God is Great).

"Don't you know we are being bombarded, how can I speak to you in this situation?" he told AFP.

Maiduguri, capital of Borno state, has seen the worst of the unrest in northern Nigeria, but the clashes first erupted on Sunday in Bauchi state when militants launched an attack on a police station.

Although four states have been caught up in the violence, most of the casualties appear to have been in Maiduguri where a police source said at least 206 people died on Monday alone.

A tally of the police figures from violence shows that at least 304 people have died.

The unrest is the deadliest in Nigeria since November last year when human rights groups say up to 700 were killed in the central city of Jos in direct clashes between Muslims and Christians.

Police said at least 3,000 residents had been forced from their homes though many had later returned.

"The food situation is terrible. All markets and shops are closed. We are eating garri (cassava flour porridge) and sugar," said a resident, Mohammed Awwan Mujahid.

The Nigerian extremists emerged in 2002 in Maiduguri before setting up a camp on the border with Niger, from where they launched a series of attacks against the police.

The leadership has previously said it intends to lead an armed insurrection and rid society of "immorality" and "infidelity".

Muslim clerics in Nigeria have condemned the violence as "criminal".

"It's unfortunate and an embarrassment to the Muslims," Abdulkarim Mohazu, secretary general of Nigeria's Jama'atul Nasril Islam, an umbrella body of Muslims in the country, told AFP.

Although northern Nigeria is mainly Muslim, large Christian minorities have settled in the main towns, raising tensions between the two groups.