It began before dawn - a devastating, well-planned attack. About 300 insurgents swarmed out of a village and mosque and attacked a pair of isolated American outposts in a remote mountainous area of eastern Afghanistan with machineguns, rockets and grenades.

US soldiers fire a Howitzer in Logar province. President Obama is to decide whether to order a surge of troops in Afghanistan. (Nikola Solic/Reuters)) They first stormed the Afghan police post at the foot of the hill in the province of Nuristan, a Taliban and al-Qaeda stronghold on the lawless Pakistan border. They then swept up to the Nato post. The battle lasted all day. American and Afghan soldiers finally repelled them, with the help of US helicopters and warplanes - but at heavy cost.

Eight American soldiers and two Afghan policemen were killed, with many injured. It was the worst attack on NATO forces in 14 months, and one of the deadliest battles of the eight-year war. The insurgents seized at least 20 Afghan policemen whose fate last night remained unclear.

The attack came at a crucial juncture in the war, with President Obama soon to decide whether to accept a request by General Stanley McChrystal, commander of the 100,000-strong US and NATO force in Afghanistan, for 40,000 extra troops, or to reduce the counter-insurgency operation against the Taliban and focus on al-Qaeda.

Domestic opposition to a US "surge" is increasing as the death toll rises. About 400 coalition troops have been killed in Afghanistan this year - the majority of them American. Saturday's death toll was the highest suffered by NATO's International Security Assistance Force since August 2008, when ten French troops died in an ambush in Kabul province. It was also the highest inflicted on US troops in Afghanistan since 200 insurgents killed nine Americans in an attack on another remote outpost in the village of Wanat in Nuristan in July last year.

NATO said that it inflicted heavy casualties in the attack but gave no numbers. "This was a complex attack in a difficult area," Colonel Randy George, commander of the US force in the region, said. "Both the US and Afghan soldiers fought bravely together."

Zabihullah Mujahid, a Taliban spokesman, said that the insurgents included several suicide bombers and that they captured 35 policemen whose fate would be decided by the movement's provincial council.

US forces have suffered some of their worst casualties in eastern Afghanistan, where they have sought to control the remote passes that insurgents use to cross the Pakistan border, but they had planned soon to withdraw from the area as part of General McChrystal's strategy to focus on protecting population centres.

Jamaluddin Badar, Nuristan's governor, said that the Taliban fighters had moved to the province after being driven from Pakistan's Swat Valley by Pakistani troops. He said that he sought more security forces for Kamdesh district, adding: "When there are few security forces, this is what happens."

Yesterday NATO officers were reassessing the security of hundreds of outposts scattered across Afghanistan.

"Everyone is aware of what happened in Nuristan, and checking their outposts are well protected and manned," said Major Jason Henneke, executive officer of the 10th Mountain Division's 2-87 Battalion in Wardak province. Major Henneke's battalion lost two soldiers, with three wounded, late on Friday when an Afghan policeman opened fire on his American colleagues during a joint operation to clear the Taliban from villages around the Nerkh valley.

US and Afghan investigators are trying to determine whether the policeman was a covert member of the Taliban or made a mistake. Either way, the attack fueled the distrust that many Nato soldiers feel towards the Afghan security forces they are training as part of the coalition's eventual exit strategy.

"You don't trust anybody, especially after an incident like this," said Specialist Raquime Mercer, 20, whose close friend died in the attack.