A Taliban spokesman told Al Jazeera: "Everyone knows we control that area, how possibly could the coalition stand there and count the bodies."
Alan Fisher, Al Jazeera's correspondent in Afghanistan, said residents in the area also reported several civilians being killed.
Ambush attempt
The clashes in Uruzgan erupted when Taliban fighters attempted to ambush a combat patrol of foreign and Afghan troops.
"Coalition air strike and artillery was requested from ground commanders to repel the Taliban attack which killed more than 65 insurgents," the statement said, adding the fighters numbered more than 80.
Three civilians were wounded in the crossfire and evacuated to a military medical facility nearby. No Afghan or US-led forces were hurt, the statement read.
In Musa Qala, Taliban fighters attacked foreign and Afghan troops, according to the US military.
"Members of the 205th Afghan National Army Corps ... killed more than 100 insurgents in an engagement, which has been on-going since yesterday morning near Musa Qala," the military said in its statement.
Helmand has suffered some of the fiercest fighting in Afghanistan since the Taliban regrouped after being driven from power in 2001. They resumed large-scale attacks two years ago.
Karzai protest
The huge clashes come as Karzai prepares to meet with George Bush, the US president, on Wednesday in the United States.
Bush is seeking assurances that Karzai is dealing with Afghanistan's soaring drug trade and security problems.
Also in southern Afghanistan on Wednesday, more than 1,000 people staged a demonstration against foreign troops, saying they killed two religious leaders overnight in Kandahar province's Zhari district and carried out house searches in the area.
The protestors chanted slogans against Karzai and the presence of foreign troops in the country.
Habib Sanzarai, the Zhari disctrict chief said: "Foreign forces must co-ordinate operations with Afghan forces in order to avoid misunderstanding.
"If these actions against ordinary people are not stopped, more people will pick up arms and will fight the government and its foreign allies for justice."