The town has seen days of violence, with 31 reported killed and hundreds of residents fleeing since Thursday.
Meanwhile, China has lodged a diplomatic protest against the
killing of a Chinese construction worker in the north-eastern city of
Maiduguri.
Boko Haram is fighting to overthrow the government and impose Sharia law.
On Friday, the army said it had detained a senior commander
of the group, Shuaibu Muhammed Bama, at a senator's home in Maiduguri,
which is where Boko Haram was founded.
The claim has fuelled suspicion that politicians are helping the militants.
BBC Nigeria correspondent Will Ross reports that the conflict
in Potiskum has reached an unprecedented level, with gunfights,
bombings and targeted killings.
In the latest violence, suspected Boko Haram gunmen hurled a bomb at a military patrol.
'Siding with Boko Haram'
"Some of our men died during the attack, but the rule is that
their families have to be notified first before it is announced," the
source told the BBC.
An army spokesman confirmed that two soldiers were wounded.
On Friday, gunmen stormed the home of a retired head of
customs in Potiskum, taking him away with his son and then shooting them
both.
At least 31 people have killed in Potiskum since Thursday, Nigeria's This Day newspaper reports.
Hundreds of residents are also fleeing, but some are stranded
because of a shortage of vehicles to take them out of town, reports
say.
China's foreign ministry spokesman Hong Lei said China paid
"high attention" to last week's killing of the construction worker in
Maiduguri - the second killing of one its nationals in northern Nigeria
this month, AFP news agency reports.
The Chinese embassy in Nigeria had submitted a formal protest
and "demanded that Nigeria take concrete measures to ensure the safety
of Chinese nationals and institutions in the country," he said.
Mr Bama was suspected of organising recent attacks in the region, a military spokesman said.
The army's claim that the alleged militant commander was held
in a senator's house has once again fuelled the debate on whether
politicians are helping the Islamist group, our correspondent says.
Last year, another senator, also from Borno state, was arrested and charged over links to Boko Haram.
The senator denied any wrongdoing and was later released on bail.
Analysts suggest that some politicians in northern Nigeria
are prepared to side with the militants in order to discredit the
government of President Goodluck Jonathan, who is from the south of the
country, our correspondent adds.
Nigeria is roughly divided between a largely Muslim north, and the south, where Christianity and traditional religions dominate.
Boko Haram is fighting to overthrow the government and impose Sharia law across Nigeria.
Attacks in central and northern Nigeria blamed on the group have killed some 1,400 people since 2010.
Alex Canan
This conflict doesn't sound like it's going to be resolved any time soon because the root of the problem is religious conflict: Islam (northern Nigeria) vs. Christianity (southern Nigeria). Rather than fight to control all of Nigeria, which would only burden them with the same problems Jonathan's government is facing right now, Boko Haram should be fighting for autonomy in their northern half. Not that I'm siding with the militant group, but maybe they could work out some semi-autonomy type of deal, as with Israel and Palestine. -Mae Markowski
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