At least 12 Afghan police and soldiers died in the fighting on Tuesday in which five US troops were wounded.
The surge in fighting has raised fears that an Iraq-style quagmire is developing in Afghanistan, months ahead of legislative elections.
Two American CH-47 helicopters were hit by small arms fire in the 11-hour battle, according to the US military on Wednesday.
One made an emergency landing and was repaired, while the other made it back to a nearby base, said US military spokesman Lieutenant Colonel Jerry O'Hara.
He said 49 rebels were killed, but General Ayub Salangi, police chief for southern Kandahar province, said Afghan forces had recovered the bodies of 76 suspected rebels from the battlefield on the border between Kandahar and Zabul provinces.
Taliban fighters seem to have
regrouped in recent months
He said the fighting spread to other areas on Wednesday, and there were unconfirmed reports of more dead elsewhere.
General Salim Khan, commander of about 400 Afghan police officers involved in the fighting, described the battlefield: "Their camps were decimated. Bodies lay everywhere. Heavy machine guns and AK-47s were scattered alongside blankets, kettles and food," he said.
"Some of the Taliban were also killed in caves where they were hiding, and US helicopters came and pounded them."
Khan said that hundreds of rebels were in the mountains, and that his forces were spotting them before giving the information to US officials on the ground.
Many of the rebels have started fleeing the area, he said.
O'Hara said AC-130 gunships, AH-64 Apache helicopters, A-10 attack aircraft and Harriers were "hammering enemy positions" and having a "devastating effect on their forces".
Although the worst of the fighting has ended, US and Afghan forces were pushing forward on Wednesday with their hunt for rebels, he said.
"We are not letting up on the enemy and will continue to pursue them until the fighting stops. Coalition and Afghan forces will continue to defeat these militants for as long as necessary to ensure the people of Afghanistan remain
free of oppression and tyranny," he said.
O'Hara said the wounds of the five injured US soldiers are not serious, and they had been evacuated to a base in the southern city of Kandahar.
There are signs that the Afghan
conflict is widening
Five Afghan police officers and seven soldiers were killed, while three officers and three troops were wounded, Khan said.
Some 30 rebels were captured, including two district rebel commanders, Khan said. Eight of the 30 were wounded.
Spy plane crash
Meanwhile, a US Air Force U-2 spy plane crashed in an undisclosed location in southwest Asia while returning to its base from a mission in Afghanistan, US Central Command said in a statement. The pilot was killed in the crash on Tuesday night.
The death toll from this week's fighting appeared among the heaviest since US planes pounded Taliban forces before the government folded in late 2001.
The last single battle of this magnitude was in August, when 70 suspected rebels were killed near the Pakistani border.
The new deaths bring to about 360 the number of suspected rebels killed since the start of a major surge in violence in March, when snows melted on mountain tracks used by the fighters, according to US and Afghan officials.
In the same time, 29 US troops, 38 Afghan police and soldiers have been killed, as well as 125 civilians.
"Coalition and Afghan forces will continue to defeat these militants for as long as necessary to ensure the people of Afghanistan remain
free of oppression and tyranny"
Lieutenant Colonel Jerry O'Hara,
US military spokesman
The increase in fighting has reinforced concerns that the Afghan war is widening, rather than winding down.
US and Afghan officials warn things could get worse ahead of the parliamentary elections scheduled for September.
The officials have warned that foreign fighters, backed by networks channeling them money and arms, have come into Afghanistan to try to subvert the polls.
Fears have been compounded by a spate of ambushes, execution-style killings and kidnappings reminiscent of Iraqi fighters' tactics.
Afghan officials claim the infiltration of rebels from neighbouring Pakistan has contributed to the rise in violence and have urged Islamabad to crack down on fighters there.