"The Taliban extremists have taken control of the areas of Garmser and Naway-i-Barakzayi. However, coalition forces do have them under observation," military spokesman Col. Tom Collins told reporters in Kabul.
Afghan officials said militants had crossed from Pakistan to the town of Garmser and trapped a small group of police in a concrete compound for 16 days.
Militants also chased police from Naway-i-Barakzayi, but Deputy Interior Minister Abdul Malik Sidiqi said government forces had retaken control Monday, shortly after the Taliban victory.
About 4,000 Afghans have fled fighting between Taliban and coalition forces in southern Helmand province in recent days, an official with the International Organization for Migration said, according to the Associate Press.
Minister Sidiqi said the militants in Garmser were part of the Pakistan-based Islamic group Lashkar-e-Tayyaba and the pro-Taliban political party Jamiat Ulema-e-Islam.
"They burned the Afghan flag and raised the Jamiat Ulema-e-Islam flag. The government of Afghanistan has technically and temporarily left Garmser. We did so to prevent casualties to civilian people," Sidiqi said, the AP reported.
Jamiat spokesman Riaz Durrani, speaking from the eastern Pakistani city of Lahore, dismissed claims that his group's members were involved in the fighting.
"We are not helping any militant group in Afghanistan against (President) Hamid Karzai's government, but the fact is that he has failed to restore order," Durrani told the AP.
The Kabul government has had a hard time controlling rugged areas in southern Afghanistan. Small village and towns linked by remote highways are easy prey for Taliban forces, according to the AP.
More than 10,000 U.S., British, Canadian and Afghan soldiers are part of the anti-Taliban offensive, called Operation Mountain Thrust, across southern Afghanistan. More than 800 people, mainly insurgents, have been killed since May, according to an AP tally based on coalition and Afghan figures.
NATO forces are scheduled to take over military operations from U.S. forces in southern Afghanistan by the end of the month
Obama Seeks to Reinforce Key Alliances on Asian Tour
