Up to 50 suspected Taliban militants were killed in heavy fighting with Afghan forces backed by US attack helicopters and "tank buster" aircraft near the Pakistan border, the US military said on Tuesday.
But a former Taliban governor of a town close to where the battle raged dismissed the US claims and said only two Taliban died.
The US casualty figure, based on estimates by pilots flying in support of Afghan soldiers in the fighting on Monday, came in a statement from the US-led force of 18,000 troops hunting al-Qaeda and Taliban guerrillas in Afghanistan.
If confirmed, it would be one of the heaviest losses the insurgents have suffered in a single battle in recent months.
"Two Taliban were martyred and eight wounded while 10 Afghan soldiers were killed," said Abdul Rauf Akhund, former governor of Khost, 150km southeast of Kabul.
"The Taliban were killed by US helicopters and US forces are relying on lies," he said.
Local Afghan commander General Khialbaz Sherzai, speaking in Khost on Monday, said he knew of only two Afghan soldiers and two Taliban guerrillas killed. The US military said 50 insurgents attacked Afghan soldiers using rockets, mortars, rocket-propelled grenades and machine guns in the early hours of Monday.
In a second assault some five hours later, between 20 and 50 militants struck in the same area.
"The exact number of enemy casualties is unknown, but pilots flying overhead estimated that approximately 40 to 50 insurgents were killed," the US military said.
US-led forces sent a B-1 bomber, an A-10 Thunderbolt II "tank buster" and attack helicopters to support Afghan soldiers in the clashes.
Sherzai said his forces saw suspected Taliban militants retreat over the border into Pakistan, many apparently wounded.
Pakistan denies Afghan accusations that its territory is being used as a sanctuary by militants.
Akhund repeated Taliban threats to step up attacks as elections approach in October and April.
"A large number of Taliban are entering several Afghan cities including Kabul and planning new attacks on foreign occupying forces," he said.
The militants dismiss the democratic process in Afghanistan as an American sham, and have vowed to wage war on foreign and local forces and aid workers and to derail the polls.
But nearly 90 percent of the country's eligible electorate has turned out to register for the elections, despite the rise in violence and other threats in recent months.
US officials say that security in Afghanistan is far better now than under the Taliban, but the frequency of attacks on targets that include civilians appears to be rising.
So far this year, 21 US soldiers have been killed in action, compared with 12 for the whole of last year.
Around 900 people have been killed in violence since last August, including many militants.
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