KABUL: Afghan officials say a district in the southern province of Helmand besieged by the Taliban for more than a week remains under government control as fighting continues.

Akhtar Muhammad, a police commander in Sangin district said on Thursday that insurgents captured the area around the district governor's compound overnight. "An hour later we recaptured that building and now we have it," he tells The Associated Press.

Spokesman for the Afghan army in Helmand, Guam Rasoul Zazai said air strikes bombarded Taliban strongholds in Sangin overnight, killing 25 insurgents and wounding another 12. Operations were slowed as insurgents began taking shelter in civilian homes, he said.

However, General Abdul Wodud, a senior army commander, said a joint Afghan and Nato operation backed by air support had driven the Taliban back from central areas, killing 60 Taliban fighters and wounding 40.

Nato headquarters in Kabul confirmed that the air strikes had taken place but gave no details: "US forces conducted two strikes in Sangin district, Helmand Province, December 23, against threats to the force," United States (US) Army Colonel Michael Lawhorn said.

The Taliban already hold three Helmand districts as well as large parts of the rest of the province outside the main centres and control key strategic roads, making it hard to reinforce and resupply security force units cut off by their advance.

But the loss of Sangin, which British and US forces fought for years to control, would be a heavy blow for Western powers backing President Ashraf Ghani's government, now fighting alone since international forces ended combat operations last year.

Sangin is an important prize for the Taliban as it sits on crucial smuggling routes for drugs, arms and other contraband which fund the insurgency.

Nato military advisers have been sent to Helmand, with an extra British contingent arriving this week, but officials say they have a purely advisory role and they have not confirmed reports that special forces units are present.