THREE Grenadier Guards and two Royal Military Police were attacked and killed as they rested inside a compound.
The soldiers, who had removed their body armour and helmets, were shot by an Afghan national policeman who then fled. It is not known whether he was a member of the Taliban or being coerced by the insurgents.
The gunman is thought to go by the name Gulbuddin and is believed to have had an accomplice, who fired shots from afar.
A spokesman for the UK's Ministry of Defence said: "It's our understanding that one individual Afghan National Policeman, possibly in conjunction with another, went rogue.
"Initial reports suggest that it was a member of the Afghan National Police who fired without warning.
"The incident happened at a checkpoint and he fired before anyone could respond.
"His motives and whereabouts are unknown at this time. Every effort is now being put into hunting down those responsible for this attack."
Peter Galbraith, who left his post as deputy head of the UN mission in Afghanistan amid disagreements over the presidential elections, said it was "not surprising" that the Afghan police had been infiltrated by the Taliban.
He said: "They wanted to get more police boots on the ground in advance of the elections so there was a real rush to recruit an additional 10,000 police, particularly in the south, particularly in Kandahar and Helmand provinces.
"So it is not totally surprising that people were recruited who may have had Taliban sympathies or were infiltrated into the police by the Taliban."
The incident is the single biggest loss of life in a gun battle since British forces began operations in 2001.
Two Afghan police are also believed to have been killed.
The shooting will raise questions about Britain’s continued commitment to Afghanistan, especially after Hamid Karzai was re-installed as President after a disputed presidential election.
There are also questions of whether there are sufficient troops and equipment to fight the Taliban in the country.
Karzai was re-elected, promising that he would stamp out corruption in all government departments, including the Interior Ministry that is responsible for the police.
His flawed election, which had been undermined by allegations of widespread fraud, throws into further question the idea of attempting to establish democracy in Afghanistan.
The Grenadier Guards, who have only been in the country for a matter of weeks, have been building contacts with the local security forces.
