A US general has revealed the Taliban in Afghanistan are very short of money with their drug labs and supply routes under pressure from US troops.

Major General Richard Mills, who leads coalition troops in Helmand province, said the NATO-led troops had disrupted the center of a lucrative opium trade and had caused a financial crisis for Taliban insurgents in southern Afghanistan.

He said Helmand, as the key poppy-growing region for the Taliban, was firmly in the hands of coalition troops who had pushed back the Taliban.

He said of the Taliban: "We have intelligence that indicates to us he has a financial crisis on his hands, he has a cash flow problem. We believe that the local insurgency here within the province has less than one half of what they had last year in operating funds."

With less money to resupply fighters, buy explosives and attract new recruits, he said, coalition and local forces had been able to make steady progress in Marjah and across Helmand province.

Major General Mills He said he believed that in the coming months there would be areas formerly run by the Taliban that would be turned over to Afghan forces, who are expected to gradually take on more responsibility from foreign troops.

The US strategy in the war hinges on building up Afghan army so that they can take over from foreign troops from July 2011.