Hundreds of bodies – too many to count – remain strewn in the bush in Nigeria from an Islamic extremist attack that Amnesty International suggested is the "deadliest massacre" in the history of Boko Haram.

Most of the victims are children, women and elderly people who could not run fast enough when insurgents drove into Baga, a town on the border with Chad.

The militant Islamists fired rocket-propelled grenades and assault rifles on the town's residents, district head Baba Abba Hassan said.

An Amnesty International statement said there are reports the town was razed and as many as 2,000 people killed.

"The human carnage perpetrated by Boko Haram terrorists in Baga was enormous," Muhammad Abba Gava, a spokesman for poorly armed civilians in a defence group that fights Boko Haram, said.

The death toll was so huge that civilian fighters gave up on trying to count all the bodies. "No one could attend to the corpses and even the seriously injured ones who may have died by now," Gava said.

If true, "this marks a disturbing and bloody escalation of Boko Haram's ongoing onslaught," said Daniel Eyre, Nigeria researcher for Amnesty International.

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The insurgents from Boko Haram, which wants to establish Islamic law as the only law in Nigeria and which condemns non-Islam thought as a sin, seized a key military base in Baga on January 3 and attacked again on Wednesday.

Mike Omeri, the government spokesman on the insurgency, said fighting continued on Friday for Baga. "Security forces have responded rapidly, and have deployed significant military assets and conducted airstrikes against militant targets," Omeri said in a statement.

The previous bloodiest day in the uprising involved soldiers gunning down unarmed detainees freed in a March 14, 2013, attack on Giwa military barracks in Maiduguri city. Amnesty said then that satellite imagery indicated more than 600 people were killed that day.

The five-year insurgency killed more than 10,000 people last year alone, according to the Washington-based Council on Foreign Relations.

More than a million people are displaced inside Nigeria and hundreds of thousands have fled across its borders into Chad, Cameroon and Nigeria.

Emergency workers said this week they are having a hard time coping with scores of children separated from their parents in the chaos of Boko Haram's increasingly frequent and deadly attacks.

Just seven children have been reunited with parents in Yola, capital of Adamawa state, where about 140 others have no idea if their families are alive or dead, said Sa'ad Bello, the coordinator of five refugee camps in Yola.

He said he was optimistic that more reunions will come as residents return to towns that the military has retaken from extremists in recent weeks.

Suleiman Dauda, 12, said he ran into the bushes with neighbours when extremists attacked his village, Askira Uba, near Yola last year.

"I saw them kill my father, they slaughtered him like a ram," said Dauda, who is staying at the Daware refugee camp in Yola. "And up until now I don't know where my mother is."