Washington -The United States on Wednesday designated Boko Haram network and an offshoot known as Ansaru as terror groups, bowing to months of pressure to act.
The groups have spread terror in northeastern and central Nigeria and are blamed for thousands of deaths as they battle to set up an Islamic state.
"These designations are an important and appropriate step, but only one tool in what must be a comprehensive approach by the Nigerian government to counter these groups," the State Department said.
The shadowy groups' insurgency has claimed many lives since 2009 and triggered concern over its potential to spread across the porous borders in the region.
A new UN report released Wednesday said more than 37 000 people have fled the region since the army launched a crackdown on the militants in May.
White House advisor Lisa Monaco said the decision cuts "these terrorist organizations" off from US financial institutions and allows any assets held in the United States to be frozen.
Nigeria welcomed the decision and expressed the hope that the United States would step up intelligence cooperation.
"We salute the US government for its effort in partnering with Nigeria to rout out terrorism," Justice Minister Mohammed Adoke told AFP in Abuja.
"We hope that with this development that the Boko Haram menace will soon become a thing of the past."
In July, the State Department offered a $7 million reward for information leading to the arrest of Boko Haram leader Abubakar Shekau, but raised eyebrows by stopping short of designating the group as a foreign terrorist organization.
State Department spokeswoman Jen Psaki explained it had taken time to blacklist the groups because "Boko Haram is a decentralized and factionalized organization with a loose command and control structure."
The United States, she added, had "worked over the years ... to deepen our understanding of the organization."
While Washington believes Boko Haram and Ansaru remain "primarily" Nigerian organizations, "both these groups have links to AQIM," she added, referring to Al-Qaeda's north and west African affiliate.
Another State Department official, who asked to remain anonymous, said the Washington believes AQIM had helped with training and limited financing of Boko Haram.
Despite Abuja's welcome for the designations, Washington has also voiced concern about a heavy-handed crackdown by Nigerian military forces, insisting that human rights should be protected.'Western education is sin'
Both groups were officially designated as Foreign Terrorist Organizations which bars any Americans from assisting them as well as freezing any assets in the United States.
President Barack Obama met President Goodluck Jonathan in September on the sidelines of the UN General Assembly and urged him "to pursue a comprehensive counterterrorism approach," Monaco said.
Roughly translated, Boko Haram means "Western education is sin," and the insurgents have been blamed for a series of bloody attacks on schools, killing dozens of children.
An earlier version of the group -- known then in local reports as the "Nigerian Taliban" -- was formed in 2004 and is now believed to have a number of different factions, with differing aims.
Local and Western analysts have long argued that improving living conditions in the mainly Muslim north holds the key to curbing the insurgency.
Boko Haram is blamed for indiscriminate attacks in Benisheikh in September 2012 in which some 160 people were killed, and was also said to be behind the suicide bombing of a UN building in Abuja in August 2011.
Ansaru has focused attacks on Nigerian military and Western targets, kidnapping several foreigners. They are believed to have been behind the kidnapping of a French family seized on the border of Cameroon and Nigeria in February and released in April.
Representative Chris Smith, who chaired a hearing Wednesday on Boko Haram, welcomed the designation, which some US lawmakers have long sought.
"What these murderers have brought to Nigeria and surrounding countries is misery and death with no redeeming outcome," he said.