Boko Haram militants are gathering en masse in the northeast Nigerian town of Gwoza in preparation for a showdown with international forces, according to an intelligence officer.
The source said security forces from Chad are in the area and moving slowly for fear of harming civilians and because the Islamist group is surrounding the town with landmines.
A woman trapped in Gwoza since it was seized in July told her daughter that last week the group urged civilians to leave the town to avoid being killed in crossfire in an anticipated battle.
Hajiya Adama said her mother said the fighters were releasing young women being held against their will, including some made pregnant during their captivity.
She said her mother left Gwoza last week and escaped to the town of Yola, in the neighbouring state of Adamawa.Boko Haram declared an Islamic caliphate across a swath of northeast Nigeria last August and continue to kill dozens in suicide bombings and village attacks, though troops from Chad and Nigeria have retaken dozens of towns in recent weeks.
Safety has come at a heavy price for tens of thousands of Nigerians who have fled the fighting and are now sheltering in neighbouring Cameroon.
Many of them scratch around for food and complain bitterly at the shortage of water in the huge refugee camp north of Maroua which is now their home.
Retaking Gwoza would be a major coup for Nigeria and for the campaign of President Goodluck Jonathan for re-election at critical 28 March ballots.
The polls have been delayed for six weeks in the hope the threat from Boko Haram can be more adequately contained.
The six-year conflict in Nigeria has killed an estimated 12,000 people and left 1.6 million people homeless.