Abdul Majeed Akhonzada, deputy director of the provincial council, said Kanashin district has "fallen into Taliban hands."
The fall of the district, which borders Pakistan and major poppy-producing districts, means "Taliban are in control of 60 per cent of Helmand," Akhonzada said.
Much of the area of Marjah, Sangin, Garmser and Dishu districts have already fallen to the Taliban, he said.
The district police chief and deputy head of the local branch of the national intelligence agency were critically wounded in clashes that began late yesterday, he said.
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Kanashin is a major smuggling route for opium. Helmand produces most of the world's opium, which helps fund the Taliban's insurgency.
The fall of Kanashin follows a report by the Special Inspector General for Afghanistan Reconstruction concluding that government forces have lost five per cent of the territory they held at the end of January.
The report released earlier this week said that about 65.6 per cent of districts across Afghanistan were under government "control or influence" at the end of May, "a decrease from the 70.5 per cent" at the end of January.
The Taliban have been fighting to overthrow the Kabul government since 2001, when their regime was ousted by the US invasion.
The insurgents consider Helmand, along with neighboring Kandahar province, to be their heartland.