Locals fought to defend their local choice
As many as 60 people have been killed in two days of heavy fighting over control of the town of Gardez in Paktia province.
The conflict came as Afghan leader Hamid Karzai reiterated his call for more international troops to be sent to help stabilise his country during talks in London.
While expressing support for Mr Karzai, UK Prime Minister Tony Blair made it clear Britain would end its current leadership role in the force.
"Our leadership is there, but it's for a limited period," Mr Blair told a news conference after their meeting.
Local matter
The fighting in Gardez is between the forces of Saif Ullah, an elderly but powerful local tribesman chosen by local people, and Badshah Khan Zadran who was appointed by Kabul.
Mr Badshah Khan is reported to have fled the town as his forces surrendered to the local fighters.
The BBC's Kate Clark, who is in Gardez, says it now remains to be seen what action the central government will take.
She reported a sudden outburst of firing from Kalashnikov rifles as local fighters celebrated what they see as their victory.
For two days, the two rival factions exchanged heavy machine-gun and rocket fire - smoke arose from residential areas where people tried to shelter.
Badshah Khan's men rocketed Gardez from outside positions but the local shura or council remained in control of the majority of the town.
US warplanes circled overhead and their special forces stationed nearby refrained from taking any action.
Our correspondent says government forces were also present, but said they were neutral and, significantly, they did not back the Kabul-appointed governor.
So far, about 60 people have been reported killed and 200 taken hostage.
Karzai's responsibility
Following the collapse of the Taleban the people of Gardez had chosen Saif Ullah and a council or shura to govern the province.
But the interim government appointed Badshah Khan Zadran - a warlord from a neighbouring province - to take control instead.
He was rejected by the local people, who last week staged demonstrations against his appointment.
Badshah Khan is closely allied to the government and our correspondent says that Mr Karzai must bear some responsibility for the situation in Gardez.
Accusations
Badshah Khan says the Gardez council is sympathetic to the Taleban and al-Qaeda, something which council members deny.
There have been repeated allegations that factions of the Northern Alliance, which controls much of the Kabul government, are deliberately attempting to destabilise the provinces of the south, where the strong tribes wield power which could come to rival their own.
Our correspondent says the fighting has further highlighted the fragility of the peace in Afghanistan, where warlords still wield enormous power both inside and outside the capital Kabul.