As part of what was thought to be a precursor to a Taliban spring offensive, Nato officials said that two columns totalling some 200 insurgents crossed into the Afghan border province of Paktika on Wednesday night.
Pakistani forces were informed of the movement of Taliban fighters and the Pakistani military claimed that it bombed and destroyed trucks used by the Taliban on its side of the border.
If so, it was the first military action by the Pakistani military since the government signed a peace deal with militants last year. US military commanders say border incursions have increased threefold since the deal.
The fighting took place as the British commander of Nato forces in Afghanistan, Gen David Richards, visited the Pakistani capital to co-ordinate military strategy between Nato, Afghan and Pakistani forces.
Pakistan has come under criticism from Nato commanders for not doing enough to stem Taliban "infiltration". Pakistan denies the charge.
The group of Taliban fighters had assembled in the mountainous terrain of North Waziristan and were seen by American reconnaissance units as they dismounted from lorries before filing over the border at two points.
As they entered Bermal district on the Afghan side of the border at 7pm they were attacked by American Apache assault helicopters firing air-to-surface missiles and 30mm machinegun rounds.
Attack aircraft then dropped a mixture of 500 to 1,000lb bombs on the two groups. The co-ordinated air and ground strikes just 1.2 miles inside Afghan territory were reported to have all but annihilated the Taliban force. The Afghan army reported that the Taliban dead, their weapons and ammunition littered the site of the fighting with blood trails apparently showing where wounded men were carried back towards the Pakistan border.
The fighting, although not continuous, lasted for nine hours as Apache aircraft tracked the disintegrating columns as fighters fled into the mountainous terrain.
Col Fitzpatrick said there were several US bases and outposts within walking distance of the Taliban fighters.
"It was a bold attack which they did not have the opportunity to pull off," he said.
Pressure has been mounting on Pakistan to do more to tackle the cross-border movement of insurgents. As Pakistan claimed to have destroyed the lorries used by the Taliban on its side of the border, the US assistant secretary of state, Richard Boucher, continued his policy of gentle pressure on Islamabad's military regime.
"It is clear to me none of us will be safe unless we deal with both sides of the border... we are all in this together."
American and Nato officials maintain that Pakistan's president, Gen Pervez Musharraf, cannot be pushed too hard to crack down on Islamic radicals for fear of provoking a violent backlash. Gen Richards said: "Today in Afghanistan the number of incidents have declined dramatically from the highs of the last summer. The reduction is to a degree the result of Pakistan army activity and we are the beneficiaries of that."
But he added that the 1,553 miles of rugged frontier still posed a big challenge.
The bloodshed was the result of violence of unprecedented severity for Afghanistan's traditionally quiet winter months.
It is thought to be the most intense fighting since the end of Operation Medusa, a major Nato offensive in the first half of September against Taliban forces in the southern province of Kandahar in which Nato claimed to have killed as many as 500 insurgents.
Yesterday's fighting contrasts with previous years when Taliban activity greatly reduced during the winter months as militants reorganised and rearmed ahead of the launch of their traditional spring offensive.
Nato commanders are braced for a major escalation in Taliban activity across the south of the country this spring with reports that the Taliban has new stockpiles of weapons and ammunition prepared along the border and is fired with renewed confidence after a year that saw the heaviest fighting in Afghanistan since 2001, and as many as 4,000 people killed, many of them Taliban fighters.