"I can confirm there has been a major incident involving Isaf troops in Girishk," Lieutenant Colonel Simon Miller, spokesman for British forces in Helmand, said.

The British military spokesman did not deny claims of Nato casualties, but said only that a statement would be released later in the day.

The Taliban, meanwhile, have claimed reponsibility for the attack, saying they killed 20 soldiers.

Rising violence

Violence in Afghanistan has spiralled since the Taliban relaunched its campaign to topple the pro-Western Afghan government and eject foreign troops two years ago.

More than 12,000 people, including some 350 foreign soldiers, have been killed since 2006 in Afghanistan, according to estimates.

On Sunday night, one Canadian soldier was killed by an explosion in Kandahar, Isaf said.

Helmand is perhaps the most volatile province in Afghanistan and the prime producer of the country's growing opium and heroin production, which in part funds the conflict.