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.
Colonel Thomas Collins, spokesman for the US-led coalition in Afghanistan said the situation in the remote district was unclear but "we have indications that Taliban are fortifying their positions in the district centre."
"We know there are fighters in the area but to the extent, I can't give you real details ... I can't give you a clear idea of what the nature of their control is in the town in this time," he said.
"They control a small area but to say they control the entire district is going too far"
Col Tom Collins, US-led coalition spokesman
"They control a small area but to say they control the entire district is going too far."
The defence ministry confirmed that the police and administration structures in the town had been disbanded.
General Zahir Azimi, a ministry spokesman said: "It is under Taliban control since yesterday."
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.
|Isaf are ready to support Afghan troops |
in retaking the town centre [AFP]
Other witnesses reported that the Taliban fighters had arrested local leaders in the town.
Local 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.
But Collins said the Nato-led international security force (Isaf) was ready to support government forces preparing to retake the centre.
"We are confident it will come under full government of Afghanistan control."
"The Taliban have in the past seized district centres and held them for some hours or days but they are eventually run out."
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.