First, I heard a deafening crash as the suicide bomber drove his vehicle headlong into the Nato convoy. It was followed by a blast that roared through the crowded streets. Then the flames began to erupt

Kim Sengupta in Kandahar witnesses the latest bloody attack on British forces in Afghanistan

There was a burst of prolonged gunfire, a screeching of tyres, and the screams of people as we ran for shelter a hundred yards away.

As the sirens wailed and helicopter-gunships circled overhead, I could see that there was nothing much left of the suicide bomber amid the smouldering pile of blackened twisted metal which had been his car.

A British Land Rover had been catapulted on to the central reservation, landing right-side-up at a drunken angle, its machine guns sticking up in the air. Two other vehicles lay abandoned, both pockmarked with bullet holes.

I was driving through Kandahar, a few hundred yards away when the attack took place. It was aimed at a British Royal Marines convoy returning to Helmand. Three civilians were killed, and 18 others were injured as were three of the marines.

It took place on the main route to the airport - nicknamed the Baghdad Highway by the locals. Kandahar is the birthplace of the Taliban, whose resurgence has led to months of ferocious fighting. Altogether 230 Afghans and 17 Nato troops have been killed in 106 suicide bombings this year, a bloody phenomenon new to Afghanistan, mirroring Iraq. Suicide bombings were almost totally unknown during the long war against the Russians, where the Afghan weapon of choice against Soviet attack helicopters was the shoulder-fired Stinger missile.

Today, five years after the official end of the war, the death toll in the past 12 months alone has reached nearly 4,000. And it was the fourth bombing in the Kandahar area in five days. Two Canadians were killed a few days ago and it is a minor miracle that there were no British fatalities yesterday, their soft-sided Land Rovers providing scant protection against suicide bombers and roadside bombs.

The force of this blast took down a wall, and sent red-hot shards of metal flying in a 50ft arc. The British Army Land Rover that took the force of the blast was remarkably unscathed apart from a smashed front and a few flat tires. As I approached, an Afghan policeman was helping himself to a bottle of drinking water from the back.

Local people and police officers claimed most of the civilian casualties were caused when the marines had opened fire after the initial bombing. Doctors at the nearby Mirwais Hospital, where the injured were taken, reported many of the wounds were due to bullets.

But Nato officials insisted the men, from 45 Commando, had acted in self-defence, opening fire on a vehicle which had ignored repeated warnings to stop and appeared to be heading towards them even as they were trying to get away from the suicide bomb.

The five-vehicle British convoy, desperate to escaper a potential trap on a road hemmed in by buildings, roared off with their injured towards Helmand. With helicopters patrolling overhead they headed to the Nato base, leaving Afghan security forces to deal with the carnage left behind.

The car the soldiers seem to have believed was coming towards them for a follow-up attack was a rusty white Toyota Corolla estate. It now lay by the side of the road, full of bullet holes. A man either dead or dying lay half sprawled out of the door. Further along was another man who had been shot on his motorbike. He was clutching his stomach, blood pouring through his fingers. We found him later at the hospital. His name was Abdul Rahim, he was a 30-year-old shopkeeper, and he was alive.

Among others shot was Lal Mohammed, a 29-year-old farmer. He shook his head in shock and bewilderment as he told me: " I was hit twice in the arm. I was coming from my village to the city and I was in a taxi when they started firing. I did not know what was going on. I just remember shouting and shooting."

Rangeen Ali, 24, was walking along the street when the bomb exploded. "Then the soldier started firing, I think they were scared. People were getting hurt. My cousin Abdul Jabbar was shot in the leg. He is just a tuk-tuk driver; he has nothing to do with the Taliban."

Until this week, there appeared to have been a brief decline in violence after a months of attritional fighting. A British withdrawal from Sangin area had followed a controversial deal with village elders at Musa Qala. The Nato forces here in Kandahar had been studying the situation and considering applying the same approach to Panjwayi, an area where there had been bitter clashes with the Taliban and their allies.

But there had been repeated claims from some senior Afghan officials that the deal at Musa Qala and other local agreements was nothing but a Taliban ploy to regroup without the presence of British forces, and they would attack again when ready. They would say this has now started.

The focus of the UK media has been on the British forces in Helmand, but it is Kandahar which is viewed by both Nato and the Taliban as of paramount strategic and symbolic significance. The Taliban had vowed that they would reconquer Kandahar, the symbol of their own Pashtun people.

According to senior Nato sources, the leaders of the predominantly Tajik and Uzbek Northern Alliance had warned that if this happened, they would take over Kabul, effectively splitting the country, and paving the way for a possible civil war.

The battle launched by Taliban fighters, more than 1,500 of them in all, was seen as testing whether the Canadians, the British, and the Dutch, having taken over from the Americans, have the will to fight. In the event Nato's Operation Medusa killed, it is claimed, more than 1,000 Taliban fighters and recovered huge stockpiles of arms and ammunition. Their hold on Panjawayi, it is said was broken.

But although the offensive undoubtedly damaged the Taliban's fighting capacity, the civilian losses, suffered mainly through air strikes, had led to anger among many local people. They are also, overwhelmingly, the principal victims of suicide bombings. For every Nato casualties there are 10 Afghan civilians.

Yesterday, lying next to the wounded from yesterday's attack at the Mirwais Hospital, was Wali Mohammed, a 22-year-old shepherd. " I was going to my home when I saw four vehicles coming towards me. One of them blew up. I tried to cover for myself and I fell unconscious. I had been hit in the stomach by shrapnel. I had 35 camels with me, my entire flock, and they were all killed."