Taliban fighters captured the strategic southern district of Sangin on Thursday, officials said, another setback for Afghan forces in opium-rich Helmand province ahead of the spring fighting season.
The capture of Sangin, where US and British forces suffered heavy casualties until it was handed over to Afghan personnel, marks the culmination of the Taliban's year-long offensive to seize the district and underscores their growing strength.
Most of Helmand is already estimated to be under Taliban control, with the capital Lashkar Gah -- one of the last government-held enclaves -- also at the risk of falling to the Taliban's repeated ferocious assaults.
"Our forces have retreated from government offices, including the police headquarters and the governor's office in Sangin," Helmand governor's spokesman Omar Zwak told AFP.
"But we are preparing to take it back."
Taliban spokesman Zabihullah Mujahid also said that insurgents had overrun the district centre.
But US forces in Afghanistan insisted that Sangin had not fallen but the district centre had been "repositioned" two kilometres south as fighting had destroyed much of the infrastructure.
"US forces assisted the repositioning with airlift to the new district center," a US military spokesman told AFP.
"Once that was complete, the US assisted in destroying the buildings that were no longer usable and also destroyed inoperable vehicles. The only thing left in the district center for the Taliban is dirt and rubble."
For years Helmand was the centrepiece of the Western military intervention in Afghanistan, only for it to slip deeper into a quagmire of instability.
The Taliban effectively control or contest 10 of the 14 districts in Helmand, the deadliest province for British and US troops over the past decade and blighted by a huge opium harvest that helps fund the insurgency.
The Pentagon has said it would deploy some 300 US Marines this spring to Helmand, where American forces engaged in heated combat until they pulled out in 2014.
The Marines will head to the poppy-growing province this spring to assist a NATO-led mission to train Afghan forces, in the latest sign that foreign forces are increasingly being drawn back into the worsening conflict.
Separately on Thursday, a policeman linked to the Taliban killed nine of his colleagues as they were sleeping in the northern Kunduz province, local police chief Aziz Kamawal told AFP.
So-called insider attacks -- when Afghan soldiers and police turn their guns on their colleagues or on international troops -- have been a major problem during the more than 15-year-long war.
Last week, three US soldiers were wounded when an Afghan soldier opened fire in Helmand, in the first known insider attack on international forces this year.