Hamid Karzai has asked Nato troops pull out of rural outposts and withdraw to their bases as he reacted to the massacre of 16 civilians by a rogue American soldier.
The surprise request by the Afghan president immediately threatened a main strand of Nato strategy as the coalition was already reeling from anger over the shootings and last month’s burning of Korans.
In a further blow, the Taliban movement announced it had halted exploratory peace talks with America because of Washington’s delay in transferring senior Taliban prisoners held at Guantanamo Bay.
The suspension apparently halted the only significant political attempt to find a negotiated settlement to the decade-long conflict.
Mr Karzai asked Leon Panetta, visiting US defence secretary, to make sure foreign troops “have to be taken out of Afghan village outposts and return to (larger) bases", a palace statement said.
"Afghan security forces have the ability to keep the security in rural areas and in villages on their own.” Mr Karzai said the move would help prevent a repeat of Sunday’s attack in Kandahar where an American staff sergeant broke into houses and methodically shot the occupants.
Training local defence militias to protect their villages and roads against the Taliban has been a central Nato strategy for more than a year, however.
Many British and American troops trying to secure the countryside are also stationed in small rural bases where they work alongside Afghan forces.
Meanwhile the Taliban movement said it was immediately suspending its political overtures in the Gulf state of Qatar, where it had planned to open an office to further negotiations.
The suspension is likely to strengthen the position of hawks within the insurgent movement and increase the likelihood of a renewed offensive this spring.
Sources close to the talks said the Taliban had been upset at American delays in releasing five senior Taliban prisoners held at Guantanamo Bay - which had been expected as a "confidence-building measure".
They had also been angered by Washington’s insistence that the movement’s representatives in their new Qatar office meet aides to Afghan president Hamid Karzai.
The Americans, he said, had been reluctant to release the prisoners too early in case it was encouraged the Taliban negotiators to increase their demands.
Washington had also been anxious not to act unilaterally and concerned to keep Mr Karzai central in their talks, he said.
There are concerns that the Afghan president may have made a series of statements calling for meetings with Taliban to undermine the talks process.
A statement issued by the Taliban blamed America’s “alternating and ever changing position” for the collapse.
However the movement appeared to leave the door ajar to restarting the talks at a later date - if its conditions were met.
Talks would remain halted “until the Americans clarify their stance on the issues concerned and until they show willingness in carrying out their promises instead of wasting time,” the statement said.
American officials have emphasised no decision has yet been made over the request to transfer the detainees, either to house arrest or to more relaxed Qatari jail.
The transfer of the senior figures, including Khairullah Khairkhwa, former governor of Herat, and Mullah Mohammad Fazl, former head of the Taliban army, was predicted to face stiff domestic opposition in America though.
The Taliban statement again rejected any possibility of talking directly with Mr Karzai’s government, which the insurgents denounce as a puppet regime of the Americans.
It said that until “the external dimension is settled which rests entirely in the hands of the foreigners, discussing the internal dimension is meaningless and is nothing more than a waste of time”.
Michael Semple, former deputy European Union representative in Kabul and a leading expert on the Taliban, said the collapse of talks will strengthen the hand of Taliban hardliners and result in more fighting.
"Within the Taliban leadership the decision to engage with the Americans in Qatar was a controversial one. It was supported by the Taliban pragmatists and opposed by the hawks. Unwittingly the US seems to have played into the hands of the hawks by taking too long to deliver on the confidence building measures that the Taliban were expecting,” he told The Daily Telegraph.
"The pragmatists simply had little to show for the risk they took by going to Qatar. This now creates a golden opportunity for the hawks to do what they know best — go back to fighting,” he added.