Washington had previously been critical of the Musa Qala pact which was devised by British soldiers who had frequently been attacked by Taliban members in the area.
Police compound destroyed
Asadullah Wafa, the governor of Helmand province, said the Taliban came into the town on Wednesday, disarmed the police and returned Thursday and destroyed part of the compound housing the police and district chief.
"People have closed down the shops this morning and those living near the area have moved out of fear," Wafa said.
Mohammad Wali, a resident of Musa Qala who estimated that between 200-300 fighters were in town, said residents were fearful that fighting between Nato and the Taliban would resume.
Other witnesses reported that the Taliban fighters had arrested local leaders in the town.
No Coalition response
ocal officials said there was no immediate move on Friday from government, the US or Nato to retake the compounds or to re-enter Musa Qala.
The Taliban routinely take towns and villages at night or for a few days, but have not been able to hold their ground when US or Nato troops counter-attack to dislodge them.
Last year was the bloodiest since US-led forces ousted the Taliban in 2001 in response to the September 11 attacks.
More than 4,000 people, a quarter of them civilians, died in fighting.