British and American special forces have narrowed their search for Usama bin Laden to a hilly area of just 30 square miles in southeastern Afghanistan, defence sources revealed Saturday.

British SAS and American troops have been dropped by helicopter across the southern approaches to the area, near the Taliban-held city of Kandahar, to prevent bin Laden from escaping into Pakistan.

As the manhunt triggered by the September 11 terrorist attacks on America intensifies, British soldiers have been involved in firefights with enemy forces around Kandahar.

"The plan has always been to deny bin Laden space," said British Defense Secretary Geoff Hoon. "The space he has to operate in is now very limited indeed."

The disclosure reflected a growing confidence in intelligence circles that they would find bin Laden soon.

A British defense intelligence source said bin Laden was believed to be "static" somewhere to the southeast of Kandahar.

"For a variety of reasons we can be confident that he has not been able to move far," the source said.

Last night the Taliban envoy to Pakistan refuted claims that bin Laden had left the country with his wives and children.

"Usama is inside Afghanistan, but I don't know whether he is in our territory or the area controlled by the Northern Alliance," said Mullah Abdul Salam Zaeef.

Donald Rumsfeld, the U.S. defense secretary, has warned that bin Laden might have access to a helicopter that could try to leave Afghanistan for a possible rendezvous with a private jet in Pakistan. However, America has imposed what it calls a "total picture" over the region, meaning that a mixture of satellite, spy-plane and special-forces cover should enable it to trace any movement on the ground.

The special forces arrived near Kandahar 10 days ago to block off escape routes and engage the enemy. "It has been about aggression and surprise," said one source. "We want to send a clear message that there is no safe way out to the rear of the Kandahar position."

SAS troops have been operating observation posts in the hills and running search-and-destroy patrols. While they had killed a small number of enemy troops, the psychological impact of their presence had been "disproportionately significant", the source said.

Refugees fleeing skirmishes around Kandahar spoke of British and American special forces searching for bin Laden in the mountains. One refugee said he had seen a British man questioning a Taliban deserter. Other Afghans crossing into Pakistan at Chaman said soldiers of western appearance were near the outskirts of Kandahar, a base for bin Laden's Al Qaeda organization as well as its Taliban hosts.

Taliban and Al Qaeda forces appeared yesterday to be preparing for last stands in the two cities still in their hands — Kandahar in the south and Kunduz in the north. At Kandahar, tribal leaders opposed to the regime agreed to allow Taliban forces to leave the city but said thousands of Arabs, Chechens and Pakistani supporters of bin Laden were staying to fight.

Thousands more were standing their ground in Kunduz in the face of a Northern Alliance offensive expected today. They threatened to massacre civilians if the alliance attacked.

British Special Boat Squadron troopers were carrying out reconnaissance at the Bagram airfield north of Kabul to establish what repairs would be needed before it could be used as a forward command base.

Military planners want to fly 4,000 troops, including marines and paratroopers, into Bagram and the northern city of Mazar-e-Sharif. They would establish a 2-kilometer security cordon around both and would protect aid convoys travelling between the two cities against attack.

The plans were thrown into confusion yesterday, however, when alliance commanders suggested that no more coalition troops would be welcome in the country.

Jack Straw, the British foreign secretary, telephoned Dr Abdullah Abdullah, his alliance counterpart, who said last night: "If you are talking about the presence of thousands of fighting troops from outside Afghanistan, this is a major issue which has to be discussed. The events of the past few days showed that the forces which were capable of doing the job on the ground were the forces of the [alliance]."

One minister confirmed there were now doubts over the plans for large numbers of British troops. However, Hoon insisted the problem would be resolved. Tony Blair is growing increasingly frustrated with the administration of President George W. Bush for not pursuing diplomatic and humanitarian initiatives more vigorously.

A cabinet minister said: "The Americans are interested only in trying to get bin Laden and push the Taliban further back. Tony's view is that now is the moment to get in there, both in terms of humanitarian aid and the diplomatic front."