He said government forces are also fighting a southwards push into neighbouring Adamawa state by the group, which has recently departed from its usual hit-and-run tactics and started to seize towns and territory.
The government source, who asked not to be named, said Boko Haram fighters had been driven from Bama, 70 km (45 miles) southeast of Maiduguri. Government warplanes have bombed and strafed the militants after they stormed Bama last week.
"Bama has been recaptured by the soldiers and I can confirm to you Maiduguri is safe," the official in Abuja told Reuters.
A market trader from Bama, Babagana Modu, also confirmed that soldiers were in control of the town, as government planes struck at Boko Haram positions in the surrounding area.
Thousands of civilians have fled the recent offensive by the Sunni jihadist movement, which has killed thousands in its five-year-old insurgency in the northeast of Africa's No. 1 oil producer.
It is now believed to be trying to mimic the example of Islamic State (IS), which has announced the creation of its own caliphate covering parts of Syria and Iraq.
Boko Haram leader Abubakar Shekau last month declared a "Muslim territory" after capturing Gwoza on the Cameroon border.
In addition to the fighting in Borno state, another Boko Haram column over the weekend pushed southwards into neighbouring Adamawa state, overrunning one town, Gulak, and attacking at least one more, Michika.
Locals reported the raiders were burning Christian churches, police stations and government offices as they went.
Nigeria's military had deployed reinforcements to Adamawa state to confront this threat, and was setting up roadblocks and positions around Mubi to prevent the militants from advancing further south, the government official in Abuja said.
Many local residents were fleeing to Yola, the Adamawa state capital, or to Gombe city in neighbouring Gombe state.
President Goodluck Jonathan, who faces elections in February and has
been criticised by opponents for not doing enough to confront Boko
Haram, was due to hold talks in neighbouring Chad on Monday with its
President Idriss Deby, his spokesman said.
Nigeria has agreed to step up cooperation with Chad and its other
neighbours Cameroon and Niger to prevent Boko Haram and other jihadist
groups from moving across their borders. Measures already discussed have
included joint border patrols and intelligence sharing.
Counter-terrorism experts say some links exist between Boko Haram and
other Islamist groups, such as al Qaeda's North African franchise and
Somalia's al Qaeda-linked al Shabaab, but there has been little evidence
so far of extensive cooperation.
In Nigeria's February polls, southerner Jonathan is expected to seek
re-election. Many believe political tensions stemming from the historic
rivalry between Nigeria's mostly Muslim north and largely Christian
south is also stoking the violence.
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