Nigerian troops killed 20 suspected Boko Haram Islamists in the restive northeastern city of Maiduguri, a senior officer said, an account quickly denied by the militant group.
Military commander Victor Ebhaleme said one soldier had been killed and two others injured in the raid.
"We got a report that some suspected members of Boko Haram were meeting at a particular location in Maiduguri. Our men mobilised, leading to a shootout. Twenty suspected terrorists were killed," Ebhaleme told AFP.
He said no arrests were made during the raid on the hideout in the Gwaidamgari area of Maiduguri, a hotbed of Boko Haram activity.
Boko Haram said Sunday that none of its members had been killed, accusing the military of killing innocent people in an attempt to dislodge the group.
A purported sect spokesman by the name Abul Qaqa who has spoken to reporters on several occasions said in a conference call that the claim by the military was false.
"They only succeeded in killing innocent civilians. It is not possible for 20 of our members to sit in a volatile place and hold (a) meeting," he said.
He vowed that the sect would continue with its insurgency in the oil-rich west African country of some 150 million people.
"We will not relent in our offensive until an Islamic state is established throughout Nigeria," he said.
Nigerian authorities have recently launched a military assault on suspected Boko Haram operational bases.
Maiduguri has been one of the the targets of the sect's deadly assaults, with scores of people killed in recent months.
Last week, explosions rocked parts of the city as troops engaged suspected members of the group in a shootout.
Nigeria, Africa's most populous nation and largest oil producer, is roughly divided between a mainly Muslim north and predominantly Christian south. Boko Haram has said it wants to create an Islamic state in the north.
The group has killed more than 1,400 people since 2010 in attacks across northern and central Nigeria, according to a new toll released this week by Human Rights Watch.
Boko Haram has different factions and its demands vary. It has increasingly attacked Christians but Muslims have also often been among its victims.
President Goodluck Jonathan said in June that Boko Haram was seeking to incite a religious crisis by attacking churches in an attempt to destabilise the government.
The US State Department last month designated three of the group's leaders as global terrorists.