Afghanistan's army chief, Gen. Bismillah Khan, is in Kandahar preparing his men for a potentially major battle with the Taliban.
A Ministry of Defense spokesman told ABC News that extra troops sent to the city this morning are standing by on high alert and that they were called in response to increased activity by Islamic militants in the region.
Eyewitnesses and locals report that the Taliban have destroyed bridges and planted mines in several villages in the Arghandab area, about six miles north of Kandahar.
Gen. Zahir Azimi stressed the severity of the situation and added that "foreign fighters are among the 300 to 400 Taliban" gathered in Arghandab.
Civilians in the area have started to flee, fearing they may be caught in the crossfire.
Saeed Shah, a resident of the Arghandab region, told ABC News that the Taliban had visited his house overnight and demanded food. He described groups of Taliban going from house to house searching for supplies.
"They were very well armed with Kalashnikovs and RPGs," he said.
Shah and many of his neighbors, unable to provide the Taliban with food, left their homes today. He said they were afraid as much of retribution from hungry Taliban fighters as they were of the brewing battle.
The hundreds who have fled their homes and fields have done so at a particulalry crucial time — harvest. The Arghandab region is famous in Afghanistan for its grape and pomegranate groves and locals have been forced to abandon a major source of income.
"This is another great problem we are facing," Shah said.
He is now in a suburb of Kandahar, living in what he described as "very bad conditions without food and water."
Kandahar is the Taliban's spiritual home and some fear they could be planning a major push on Afghanistan's second city. The BBC reported that a self-described Taliban commander, Mullah Daoud, said, "We have gathered in Arghandab because we want to capture an important city like Kandahar."
Another Taliban commander named Mullah Ahmedullah called an Associated Press reporter today and said that around 400 Taliban had moved into Arghandab from Khakrez, one district to the north.
"We've occupied most of the area and it's a good place for fighting," Ahmedullah said. "Now we are waiting for the NATO and Afghan forces."
However, a press release issued by the Afghan National Police denied this claim.
"Afghan National Police and Coalition forces completed a patrol in the Arghandab District of Kandahar province today and found no evidence that militants control the area," the release said. "While in the area, Coalition forces moved freely and met with no resistance."
NATO spokesman Mark Laity confirmed to ABC News that 700 Afghan soldiers had been sent to Kandahar from Kabul and that 200 ISAF soldiers had been repositioned there due to the escalating situation.
Laity added that leaflets were being dropped in the region warning residents to stay indoors.
"Keep your families safe. When there is fighting near your home, stay inside while ANSF [Afghan security forces] defeat the enemies of Afghanistan," Laity quoted the leaflet as saying.
This surge in militant activity comes just days after an audacious jailbreak Friday in Kandahar in which the Taliban freed more than 900 prisoners. Local officials said they believe there were as many as 400 Taliban among the escapees.
A Taliban spokesman told the Associated Press that several of these escapees have joined the Arghandab assault and are prepared to fight to the death.
News of the Kandahar jailbreak so enraged Afghan President Hamid Karzai that he threatened to pursue the Taliban across the Pakistani border.
"We will complete the journey and we will get them and we will defeat them. We will avenge all that they have done to Afghanistan for the past so many years." Karzai told reporters Sunday.
Pakistani Prime Minister Syed Yousuf Raza Gilani retorted that Pakistan would not tolerate such cross-border raids.
"We want a stable Afghanistan. It is in our interest," he told the AP. How can we go to destabilize our brotherly country? Such kind of statements will not be taken well by the people of both countries."
While tensions mount in and around Kandahar, Humayun Hamidzada, Karzai's spokesman tried to calm the political situation with Pakistan, telling reporters that Karzai does not intend to send troops into Pakistan and was only making "a strong point" that Pakistan needs to crack down on militant safe havens.
The Associated Press contributed to this report.