Islamic State West Africa Province, a splinter faction of Boko Haram, ambushed a military convoy on Tuesday at Bulabulin village in Damboa about 40km from Maiduguri.
Twenty-three soldiers were initially reported killed in the attack.
“We lost 35 soldiers from the ambush. Eighteen others were injured, while 30 are still missing. Their fate is not known,” a security source told AFP.
“More bodies were recovered in the bush by rescue teams which led to a rise in the death” toll, the source said.
Another source confirmed the new toll to AFP
“Thirty-five bodies of troops were recovered as … search teams combed the area around the scene of the ambush. Another 30 have not been accounted for. It is not known whether they are dead or alive,” he said.
He said the jihadists torched a mine-resistant vehicle and carted away eight gun trucks, guns and communication equipment.
“It was a surprise attack. The terrorists hid inside heaps of foliage they gathered along the road and opened fire on the convoy as it passed. It was a close-range ambush,” the sourcoe said.
The troops were returning from patrol and clearance operation against the insurgents when they came under attack.
Nigerian Defence Headquarters in a statement confirmed the attack but stated that only two soldiers were killed and four wounded.
It said 17 insurgents were killed in the subsequent fighting.
Violence in northeastern Nigeria has killed 36,000 people and displaced over two million others.
Since April, the Nigerian military high command relocated the Northeast with the Chief of Army Staff, Lt.-Gen. Tukur Buratai, leading the charge.
In June, Buratai reported that the military operations had recorded huge successes.