Afghan government forces have lost control of the centre of the town of Sangin in Helmand province after days of fierce fighting, reports suggest.
Eyewitnesses told the BBC the Taliban controlled the local government building and police station.
The Taliban say their fighters have seized the entire district and that their flag is flying over Sangin.
However, the Afghan defence ministry said fighting was continuing and that reinforcements had been sent.
Eyewitnesses say some government forces are still fighting in the district centre but are cut off.
District governor Haji Suliman Shah told the BBC he had been airlifted from the district headquarters to Shorabak base – formerly Camp Bastion – in Lashkar Gah early on Wednesday, along with 15 wounded security force members.
Meanwhile Ashuqullah, a police officer with an Afghan army brigade at a barracks about 7km (four miles) from Sangin, told the BBC the “entire” town was controlled by militants.
“Support troops have been airdropped at a distance… but all roads are blocked and in the militants’ control,” he added.
He said a few hundred members of the security forces were besieged at the barracks.
Sangin was a key focus of Nato’s involvement in Afghanistan.
Helmand province has been a major centre of the Taliban insurgency with important supply routes for the opium trade.
Its proximity to Pakistan also gives the area a broader strategic significance.
Afghanistan’s acting Defence Minister Masoum Stanikzai described the situation in Helmand as “manageable” and said fresh support troops had been sent in.
However the evacuation by air of the top government official from Sangin suggests many believe the district centre will fall under Taliban control at some point on Wednesday, says the BBC’s Waheed Masoud in Kabul.
A Taliban spokesman, Qari Yousuf Ahmadi, claimed on Wednesday:
“The Sangin district centres, its police HQ, and other establishments were under continued attacks of the mujahideen and today… with God’s grace the district was fully captured by the mujahideen.
“The white flag of the Islamic emirate is at full mast at the district now.”
Haji Daud, the head of the Sangin district people’s council, told the BBC that Sangin residents had fled the district to neighbouring areas.
Responding to the defence minister’s claims, he said: “Those whose family brothers and siblings and parents are not fighting on the front, they always say the situation is not dangerous in the area…”
“Those who make such comments do not care to defend Helmand.”