Nato troops close in on Taliban stronghold

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Afghan and Nato troops were closing in on the Taliban stronghold of Musa Qala last night after fierce fighting which left one British soldier dead. As the latest death was announced, Gordon Brown prepared to announce a shift in British policy to focus on recapturing Afghan "hearts and minds".

The Afghan government claimed that the insurgents have been cleared from large tracts of the town, and two senior Taliban leaders captured. The Taliban insisted in a statement that they had pulled back to the centre of Musa Qala to avoid further civilian deaths following the killing of two children.

The British soldier, from the 2nd Battalion of the Yorkshire Regiment, was killed during the first phase of the operation when the town was being encircled for the assault by Nato and Afghan troops. The death brought the number of British service personnel killed in Afghanistan to 86 since the war of 2001.

The mission to wrest Musa Qala, in southern Helmand Province, from the Taliban has followed weeks of intensive talks between the UK, US and the Afghan government of Hamid Karzai. It will be followed by a statement on future British policy by the Prime Minister, Gordon Brown, on Wednesday. A senior British Government source said the statement to Parliament would amount to a "change of strategy" including more aid for the country in order to target hearts and minds.

The Prime Minister had predicted the shift in his first major foreign policy speech last month, in which he said that "in Afghanistan we will work with the international community to match our military and security effort with new support for political reform and for economic and social development."

Musa Qala has become a symbol of Taliban resurgence, with Islamist fighters controlling the urban centre at the heart of British operations in Helmand. The situation has highlighted serious differences between the UK and the US. British forces withdrew from the town in a deal with local elders who pledged to keep the Taliban out. Senior American officers, including the current Nato commander in the country, General Dan McNeill, held that the agreement allowed insurgents to build a base from where they could organise bombings and shootings.

Musa Qala also became a key conduit for the opium trade, with the proceeds being used to fund the Taliban's activities.