Jihadists have taken hundreds of civilians hostage from a town in northeast Nigeria, locals and militia sources said Wednesday.

Militants from the Islamic State West Africa Province (ISWAP), an offshoot of Boko Haram, arrived in Kukawa in the Lake Chad region late on Tuesday with 22 trucks and were locked in a battle with guards securing the area, said Babakura Kolo, head of a local militia.

The people who were seized had just returned to their homes after spending nearly two years in displacement camps.

A local chief who accompanied the residents to the town said the people had returned with the hope of cultivating their farmlands "only to end up in the hands of the insurgents".

"We don't know what they would do to them but I hope they don't harm them," said the chief, who asked not to be identified for safety reasons.

Hundreds of others have now fled the area.

Over the last decade, many people have fled to squalid displacement camps where they rely on handouts from international charities.

Around two million people have fled their homes in Nigeria due to the decade-long jihadist conflict.