Killed in action: Marine Jonathan Wigley, born Melton Mowbray, 1985. Died Garmsir, 2006

His death on Tuesday seemed to be just another tragic casualty in Afghanistan. But his killing, possibly by US fire, raises a series of questions that should haunt the men who sent him to war. By Kim Sengupta in Helmand and Raymond Whitaker

Resistance had been muted as the Royal Marines of Zulu Company crossed the bridge over Helmand river into the Taliban country of Garmsir. Although there was a full moon, some sporadic gunfire and a few misplaced grenades seemed to the only things to worry about. But then suddenly, there was a ferocious ambush from a hidden and well-entrenched enemy.

The British troops were pinned down in a stretch of farmland, among mud-walled compounds and a network of irrigation canals, with their line of retreat cut off by relentless fire from machine-guns and mortars. As the insurgents tried to encircle them, the beleaguered men of 45 Commando called in air support. Taliban positions were pounded by US F-18s and A-10s, and British Apache helicopter gunships.

It was at this moment, amid the flames, smoke and ear-splitting noise, that Jonathan Wigley was mortally wounded - almost certainly by friendly fire. "I saw it. It was the A-10. I was five feet away," said a marine afterwards, his face etched with dirt and tiredness. "I saw it swooping toward us. I will never forget that noise. It was horrible."

An armoured ambulance took Marine Wigley, from Melton Mowbray, and another wounded man from the scene. It was a harrowing journey, with bullets constantly hitting the armour. Describing their attempts to revive Marine Wigley, a Garmsir member of the medical crew made pounding motions in the air. "We kept going for 20 minutes," he said quietly. "But he had stopped breathing."

The death of the 21-year-old marine last Tuesday, in one of the heaviest clashes 45 Commando has seen since it arrived in Helmand two-and-a-half months ago, has raised fresh questions about the British mission in southern Afghanistan.

It comes amid revelations this weekend that hundreds of troops wounded in Iraq and Afghanistan are to be awarded millions of pounds in compensation following a ruling by the Government that they are victims of crime, not war. The decision has far-reaching implications, and means that insurgents attacking British troops in these theatres of war are now officially regarded as criminals, not enemy troops.

The groundbreaking ruling means that some 40 injured servicemen can expect to receive payments of up to £500,000 each in a series of test cases. Compensation will be on a sliding scale based on the severity of injury - from £1,000 for a small facial scar to £500,000 for the loss of a limb - and the first payments will be made in early spring. The ruling was agreed, it is understood, after government lawyers became afraid that the Ministry of Defence could be open to legal challenges by soldiers injured in Iraq after the end of "at war" hostilities in May 2003.

In southern Afghanistan, although the Royal Marines have engaged in several firefights with the Taliban around Garmsir in recent weeks, Tuesday was the first time they had tried to seize ground from the insurgents, and they found themselves outnumbered. With Taliban fighters attempting to move in behind them, troops had to blast their way out through a succession of mudbrick walls.

After a 10-hour battle, Zulu Company withdrew to their starting point, a small bridgehead on the eastern side of the Helmand river, the only part of the Garmsir district in Afghan government hands. They have stayed there since, fighting off fresh Taliban attacks.

His men had expected resistance, said Major Andy Plewes, the company commander. "What we didn't know was how strong it was. We were prepared for it, which is why we were able to hold them off and move safely back ... but we don't have enough forces in the area to hold ground completely. That has to be done by Afghan security forces."

Major Plewes was identifying one of the worst problems facing Nato forces in Afghanistan. Their British commander, Lt-Gen David Richards, had hoped to adopt less aggressive tactics than the US forces they replaced, but like the Americans, they are constantly having to make up in firepower what they lack in numbers on the ground.

If Lt-Gen Richards had been given the strategic reserve of around 1,000 soldiers he has constantly sought, troops needing support would not have to rely so frequently on air strikes. These inevitably have unintended effects: while Marine Wigley was in a very dangerous situation, the risks of having to call in a fearsome ground-attack aircraft such as the A-10 to blast insurgents in the next trench are obvious.

At the recent Nato summit in Riga officials claimed that the removal of caveats on their troops' rules of engagement by some nations "effectively made 2,000 more troops available for the front line". But this is little more than sleight of hand. With a lack of helicopters, and forces stretched across Afghanistan, it is simply not possible to move troops around in large numbers.

For the British forces in Helmand, the shortage of fighting soldiers may cost them an opportunity in Garmsir. The town has been at the centre of heavy fighting between government forces and the Taliban, which has many militants from nearby Pakistan in its ranks. During the summer, when the insurgents twice seized Garmsir, even local people who opposed the presence of foreign forces were angered when the insurgents burned the Afghan flag and hoisted the banners of two Islamist groups in Pakistan.

There is also disquiet about the laws of the old Taliban regime being introduced in areas held by Islamists. Schools have been shut down and there have been a number of public executions.

Ahmed Jan, who moved with his family of nine from Garmsir to the provincial capital, Lashkar Gah, said: "We had nothing but fighting there all summer, and I know a lot of people have left their homes. The Talibs take over our homes and carry out their attacks, then Nato do their bombing, so it is safer to move away. But why are the British not driving out the Talibs?

The answer is that the British would need a much bigger force without having to use the kind of firepower that would leave the locals finding only ruins on their return. Nor is that supposed to be the mission: commanders stress they went into Helmand to provide support for reconstruction and development, not to seek war with the Taliban. Troops are carrying out what development work they can in Helmand, but they lack the numbers to have a major impact.

When winter is over, the Taliban vows to return in greater force. If Nato troops find themselves battling the insurgency, with no goal in sight, Mr Jan will not be alone in asking why foreign troops are there. At that point, others might need reassurance that Marine Wigley did not die in vain.