A coordinated assault by 800 Taliban fighters on police checkpoints and military posts began on June 19, with Afghan forces rushed in to recapture parts of Sangin district in Helmand province.
Despite government claims that the Taliban have been routed in a series of counter-attacks, Hashim Alkozai, a local elder, told AFP that the insurgents had successfully defended two key areas of the district.
"The government has sent more reinforcements to Sangin, but the Taliban still has two parts, Barekzai and Bostanzai, under their control," Alkozai said after fleeing to Lashkar Gah, the provincial capital of Helmand.
Sangin, a strategically important district at the centre of Afghanistan's lucrative opium trade, has been the scene of fierce fighting for years between the Taliban and US-led NATO forces.
More From This Section
With the NATO combat mission winding down this year, the Taliban offencive is seen as a test of the NATO-trained Afghan government forces now responsible for quelling the insurgency.
British troops fought bloody battles in Sangin for four year to little effect, before US marines replaced them in late 2010 and finally pulled out themselves only last month.
This summer's "fighting season" will be the last with US-led combat troops deployed in Afghanistan, after a 13-year war that has cost the lives of 3,500 coalition soldiers and failed to crush the Taliban.
The fighting in Helmand has come as politicians in Kabul are locked in a stalemate over the presidential election, with one candidate, Abdullah Abdullah, saying he rejects the ongoing vote count due to massive fraud.
"The Taliban have planted mines almost in every part of Sangin, so no vehicles dare to drive even on the main roads," said Toor Jan, who escaped the fighting by walking for two days with ten members of his family to Lashkar Gah.
"We are now living with our relatives but this cannot continue for long. We are in severe need of any kind of assistance," he said.