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.
Sergeant Lee Johnson, 33, of 2nd Battalion The Yorkshire Regiment, died after a mine ripped apart the vehicle he was travelling in early on Saturday, killing him and seriously injuring another soldier.
The father of two from Stockton-on-Tees had cancelled his leave to take part in the offensive.
As the latest death was reported, 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.
Sgt Johnson, 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 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.
Sgt Johnson, whose brother is also serving with the same battalion in Afghanistan, was planning to marry his fiancee Lisa next year.
She said: "He said being with his family was what was going to get him through his six month tour.
"He leaves behind his son Ashley and two and a half year old daughter Lilly."
His sister, Cassandra, said his family regarded him as a "hero".
She added: "We are just glad that his brother Don is with him and can bring him home to us."
Sgt Johnson, who was a keen boxer and judo expert, had been training the Afghan National Army.