Nigeria's military has accepted that it was facing an uphill battle to stem the tide of Boko Haram violence, calling the insurgency a threat to national sovereignty.
But it rejected claims that it was in denial about the seriousness of the threat after recent militant gains in the northeast that prompted fears that the government risked losing control.
The United States on Thursday voiced concern about deteriorating security, with the Islamists reportedly in charge of the town of Bama in Borno state, near the state capital Maiduguri.
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"All steps are being taken to ensure the success of the counter-insurgency operations, especially at this crucial time when our sovereignty is being challenged," he added.
US Assistant Secretary of State Linda Thomas-Greenfield on Thursday said the upsurge in violence was a "sober reality check" and warned that failing to confront it threatened Nigeria's future.
"The reputation of Nigeria's military is at stake," she told a bilateral security meeting in Abuja. "We are past the time for denial and pride."
Nigeria's military high command has repeatedly denied that the insurgents have taken over northeastern towns and that hundreds of soldiers deserted their posts.
The military has also rejected as 'empty' claims from Boko Haram's leader, Abubakar Shekau, that the captured town of Gwoza, also in Borno, was now part of an Islamic caliphate.
In recent months there have been numerous reports that soldiers have refused to deploy to counter-attack Boko Haram. Troops have complained in particular that the insurgents are better armed.
Olukolade said military top brass were aware of the concern at home and abroad about the situation, but added: "Everything will be done to reverse the situation and defeat the rampaging terrorists.