The operation to retake Sangin started late on Wednesday and was part of Nato's largest offensive to date in Afghanistan, Operation Achilles.
Nato commanders are trying to push the Taliban out of the northern tip of Helmand to allow multimillion-dollar repair work to go ahead on a dam in the Kajaki district which would supply the country's south with electricity.'Information war'
"Six weeks ago Al Jazeera filmed in this same area. It was clear then it was entirely under Taliban control," James Bays, Al Jazeera's correspondent in Afghanistan, said.
"Having security is of no use unless a massive amount of aid is invested into the community"
Justtone, Nottingham, UK
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"There is an information war as well as a military battle going on. Nato now say they have retaken Sangin but before they never admitted it had been held by the Taliban."
A local Taliban commander has told Al Jazeera that the group plans to recapture the town from Nato and Afghan forces within days.
Haji Akhtar Mohammad, a Sangin resident, told The Associated Press news agency that Nato and Afghan troops were in control of the centre of Sangin on Saturday and the Taliban appeared to be moving towards the neighbouring district of Musa Qala.
About 4,500 Nato and 1,000 Afghan troops are in and around Helmand province as part of Operation Achilles.
There have been over 220 "tactical engagements" since the start of the operation and dozens of fighters have been killed or captured, according to Nato officials in Kabul.Taliban meetings
On Friday, Hamid Karzai, the Afghan president, admitted meeting members of the Taliban movement in an attempt to to bring reconciliation to the country.
|Karzai said on Friday he had met Taliban|
leaders to bring about reconciliation
Speaking in Kabul, he said Taliban representatives had been regularly meeting government bodies, adding: "I've had some Taliban coming to speak to me as well, so this process has been there for a long time."
On the same day, elsewhere in the Afghan capital, a suicide bomber struck a few hundred metres from the parliament building, killing at least five people including a policeman.
"It was a suicide bombing ... The bomber was driving a yellow and white taxi," General Alishah Paktiawal, the city's criminal investigation police chief, said.