The highest number of British deaths in a single attack comes at a time when relations between Hamid Karzai and his Western sponsors are once again enmeshed in acrimony.
The violence against Nato forces and foreign aid agencies, during which six US soldiers were killed by Afghan security staff after American officials burned copies of the Koran, had already shown the volatile nature of the situation.
Tuesday evening's blast, which used a huge quantity of explosives in an area that had supposedly been cleared, showed the Taliban still have the supplies and opportunity to strike.
With Nato's International Security and Assistance Force (Isaf) due to start pulling out its troops, and combat roles finishing in two years' time, the attack highlights the fragility of the situation.
But American and British officials complain that instead of trying to diffuse tensions and support his international allies, President Karzai and his officials have used the crisis for political advantage, repeatedly raising the Koran incident to fuel public anger, despite a public apology from President Barack Obama.
Two issues in particular have fuelled the confrontation between President Karzai and the Americans, stymieing the "strategic partnership" talks to frame the countries' relationship for the next decade.
President Karzai has demanded that Nato forces end night operations against insurgents and hand over all detainees to Afghan jurisdiction. A block on night raids, claim Western commanders, is hampering operations against the Taliban, including efforts to catch them planting improvised explosive devices and moving fighters and weapons.
Mr Karzai is adamant that he will not back down on these points. His office has made public a telephone call to Anders Fogh Rasmussen, the Nato Secretary-General, in which he emphasised that any agreement must "respect the Afghan national sovereignty – meaning no imprisonment of Afghans by foreign troops and the transfer of all prisons in foreign force authority, and the end to the night operations by the foreign forces".
Some powerful supporters in Washington of the Afghan mission have declared that Mr Karzai's "intransigence" means that the US should now consider pulling out sooner. Senator Lindsey Graham, who has urged commitment beyond the 2018 combat cut-off date, said: "If the president of the country can't understand how irrational it is to expect us to turn over prisoners, and if he doesn't see that the night raids have been the biggest blow to the Taliban... then there is no hope of winning. That means we fail in Afghanistan and that means Lindsey Graham pulls the plug."
A senior American officer said: "We have explained to the Afghans that most of the night raids are led by members of the Afghan National Security Forces. Isaf is also committed to a detainee transfer system taking place in six months. But it seems there are some people around Karzai determined on not making any compromises."
Western officials believe Mr Karzai's stance may be driven by plans to run again for the Presidency, despite the Afghan constitution forbidding a third term. Rahim Naimtullah, an Afghan political analyst said: "There are all kinds of rumours that he wants to do a Putin and put in someone else for one term, or he may even try to change the constitution. So it will do no harm to be seen to be standing up to the foreigners."