Islamic State-linked jihadists in Nigeria attacked humanitarian facilities in the restive northeastern town of Damasak, aid workers told AFP on Saturday.

The attack, ongoing late on Saturday, is the second in two months affecting one of the United Nations nine hubs in the country.

Fighters from the Islamic State West Africa Province (ISWAP) stormed Damasak, in Borno state, setting fire to facilities of international aid organisations.

"ISWAP fighters are still inside Damasak, moving on the streets, firing guns and setting humanitarian facilities on fire," said an aid worker who asked not to be identified. 

The UN hub was gutted after fire set on the nearby office of an international charity spread to the UN facility, said a second aid worker. 

The offices of three other international NGOs were also burnt by the insurgents who took over the town, the second aid worker added.

Ongoing fire burning in the vicinity of an NGO warehouse has escalated into humanitarian hub facilities, read a UN memo seen by AFP.

A military source confirmed the Saturday attack on Damasak but said militants failed to overrun the town.

"They came through the town towards the Brigade but they were repelled," the military officer said, speaking on condition of anonymity, without providing details.  

Some residents were reported to be fleeing from the town towards neighbouring Niger.

Damasak has repeatedly been targeted by ISWAP militants who have made several failed attempts to overrun a military outpost outside the town.

ISWAP, which split from the jihadist group Boko Haram in 2016, has become a dominant threat in Nigeria, attacking soldiers and bases while killing and kidnapping passengers at bogus checkpoints.

On March 1, ISWAP jihadists overran a UN hub in Dikwa, killing six civilians and forcing aid workers to temporarily retreat from the town despite urgent humanitarian needs.

Due to worsening security, humanitarian workers in Nigeria are struggling to provide aid, with the number of people requiring urgent assistance forecast to rise to 8.7 million this year. 

President Muhammadu Buhari reshuffled the military command this year, raising hopes of a shift in strategy to end a 12-year-old conflict that has killed 36,000 people and forced around two million to flee their homes.