He said that 20 foreign and Afghan soldiers were killed or wounded, but Nato said no deaths had been reported on the pro-government side.

Kamal Uddin, the deputy provincial police chief, said no civilian casualties had
been reported.

Fighters disguised

Al Jazeera's David Chater, reporting from the capital, Kabul, said fighters had stormed various points in the city.

"Attack helicopters are over the city and have fired upon insurgents"

International Security Assistance Forces (Isaf) statement

"Apparently they were dressed in either Afghan national army uniforms or police uniforms. Several explosions have been heard," he said.

Nato said its troops and Afghan soldiers had contained the Taliban fighters in an empty building.

"We cleared the building just minutes ago and all the enemy elements were killed," General Shair Mohammad Zazai, the southern military commander, said after the fighting ended.
"We have collected five bodies of the militants and the building is under our total control," he told the AFP news agency.

Taliban assaults

Daoud Ahmadi, a spokesman for the provincial government, said officials had received tips in recent days that the Taliban planned an attack on government buildings in Lashkar Gah.

The Taliban have attempted similar attacks in Kabul, most recently on January 18 when seven attackers were killed after a five-hour assault.

Five Afghan civilians and security forces also died in that fighting.

The Helmand assault comes a day after a new fund aimed at reducing the Taliban threat was announced in an international conference on the future of Afghanistan held in London.

The fund sets aside $140m for the first year of a programme to "reintegrate" moderate Taliban into the Afghan society.

The Taliban released a statement dismissing the initiative as  "futile", but a UN official revealed that "active members of the  insurgency" had met an envoy from the international body early this month at their request.