"Right now there is a heavy fight going on between Afghan security forces and Taliban in Sangin in the district governor's building and the police chief's headquarters," Helmand governor, Mirza Khan Rahimi, told Reuters.
He said Taliban fighters were outside the compound walls and the situation risked slipping entirely out of control.
In Kabul, Abdullah Abdullah, chief executive of the National Unity Government with President Ashraf Ghani, pledged "immediate action" after a meeting with security ministers.
"This action will repel enemy attacks," he said.
Helmand, a major center of opium cultivation and a traditional Taliban heartland has been the scene of fierce fighting for months.
On Sunday, Helmand Deputy Governor Mohammad Jan Rasulyar issued an unusual open plea to Ghani on Facebook, warning that Sangin was "on the verge of collapse" and the whole province could follow.