The most senior British Army officer to be killed in action since the Falklands War was described as "a born soldier" who was "destined for greatness."
He is the most senior serviceman to be killed in Afghanistan since operations began in October 2001.
The 39-year-old, from Kirtlington, near Oxford, took command of the 1st Battalion in October last year and was in charge of more than 1,000 soldiers.
The Ministry of Defence also announced the death of trooper Joshua Hammond, of 2nd Royal Tank Regiment.
The 18-year-old was described by senior officers as a "superb soldier."
General Sir Richard Dannatt described Lt Col Thorneloe as "an outstanding commanding officer" who was at the "leading edge of his generation".
"His courageous, thoughtful stewardship of 1st Battalion Welsh Guards since October last year has seen them superbly prepared for the demands of Afghanistan, both in terms of their professional capability and their unbreakable spirit as a team," he said.
Prince Charles, who is understood to have known Lt Col Thorneloe well, was "deeply saddened," a Clarence House spokesman said.
Tpr Hammond, 18, who had been in the regiment for a little over a year, was said to be "a first class tank crewman" who was "popular with his comrades and a true family man."
Lt Col Thorneloe and Tpr Hammond were both killed while on the British operation Panthers Claw.
The operation was launched on June 19 to drive the Taliban out of strongholds in and around Babaji, north of Lashkar Gah in Helmand.
It has been bolstered by a new U.S.-led operation — named Khanjar, or Strike of the Sword — involving almost 4,000 US Marines and 650 Afghan troops.
Senior British officers acknowledge UK forces are stretched in Helmand but insist they are not being "bailed out" by the Americans.
The latest British deaths take the number of UK servicemen and women who have died in Afghanistan to 171.