Soldiers in armoured personnel carriers surrounded and shelled parts of a compound that is home to Mohammed Yusuf, the leader of the radical Boko Haram sect, in the city of Maiduguri, destroying buildings including a small mosque.
Police said they freed around 95 women and children being held by the sect at another building, revising down an earlier figure. Sect members say their wives should not be seen by other men and their children should receive only a Koranic education.
The women and children appeared to have been moved to a compound by sect members when the fighting began. Some told the BBC they had been held for six days, living on dates and water.
Yusuf's whereabouts were unknown. Joint military and armed police patrols searched for his followers, arresting more than 100 people. Sporadic bursts of gunfire rang out across the city throughout the day.
"The soldiers and police are now combing the whole city of Maiduguri, going house to house searching for followers of the Boko Haram," Maiduguri resident Adamu Yari told Reuters.
Police in neighbouring Yobe state said they had recovered the bodies of 33 sect members after a gunbattle near the town of Potiskum, bringing the total death toll across the region to more than 180, most of them suspected Boko Haram followers.
In Kano, 500 km (310 miles) west of Maiduguri, police arrested 53 suspected sect members including the second in command in the state, Abdulmumuni Ibrahim Mohammed, and said they were under orders to destroy his leader's home and mosque.
"Whether I am arrested or not there are others out there that will continue with the job," Ibrahim Mohammed said.
Police said the men had been found with home-made guns and explosives and were believed to be planning attacks. Arrests have also been made in Sokoto, in the far northwest.
President Umaru Yar'Adua has ordered the security forces to take all necessary action and warned that the leader of the group wants to declare a "fully fledged holy war".
"These people have been organised and are penetrating our society and procuring arms and gathering information on how to make explosions and bombs to force their view on the rest of Nigerians," he said.
Modelled on the Taliban
The violence erupted when members of Boko Haram, which wants a wider adoption of Islamic sharia law across Africa's most populous nation, were arrested on Sunday in Bauchi state on suspicion of planning an attack on a police station.
Yusuf's supporters—armed with machetes, knives, home-made hunting rifles and petrol bombs—have since attacked churches, police stations, prisons and government buildings.
Police in Maiduguri said on Tuesday 90 rioters had been killed as well as eight police officers, three prison officials and two soldiers. More than 50 people were killed in the initial violence in Bauchi and several more have died in Kano.
The states affected are among the 12 of Nigeria's 36 that started a stricter enforcement of sharia in 2000—a decision that has alienated sizeable Christian minorities and sparked bouts of sectarian violence that killed thousands.
Boko Haram, which means "Western education is a sin" in the Hausa language spoken across northern Nigeria, is loosely modelled on the Taliban movement in Afghanistan and is sometimes referred to as the "Nigerian Taliban".
Its views are not espoused by the majority of Nigeria's Muslim population, the largest in sub-Saharan Africa.
"We call on all Muslims in the country to condemn these criminal activities and give maximum support to security agencies," Nigeria's Muslim umbrella group Jama'atu Nasril Islam said in a statement quoted in the Leadership newspaper.
More than 200 ethnic groups generally live peacefully side by side in the country of around 140 million people, roughly equally split between Christians and Muslims, although civil war left 1 million dead between 1967 and 1970 and there have been bouts of religious unrest since then.
The violence in the north is not connected to unrest in the Niger Delta in the south, where militant attacks have prevented Nigeria from pumping much above two-thirds of its oil capacity.
