(For full coverage on Afghanistan, double click on [ID:nAFPAK])

* Attempt to break Taliban hold with decisive operation

* Taliban vow to fight back

* No casualties or major engagements reported so far

By Peter Graff

GARMSIR, Afghanistan, July 2 (Reuters) - Thousands of U.S. Marines stormed deep into Taliban territory in an Afghan river valley on Thursday, launching the biggest military offensive of Barack Obama's presidency.

The Marines say Operation Khanjar, or Strike of the Sword, will be decisive and is intended to seize virtually the entire lower Helmand River valley, the heartland of the Taliban insurgency and the world's biggest opium poppy producing region.

In swiftly seizing the valley, commanders hope to accomplish within hours what overstretched NATO troops had failed to achieve over several years, and by doing so turn the tide of a stalemated war in time for an Afghan presidential election in August.

"The intent is to go big, go strong and go fast, and by doing so we are going to save lives on both sides," Brigadier-General Larry Nicholson, commander of the Marines in southern Afghanistan, told his staff before the operation.

With violence in the Taliban-led insurgency at its highest since the austere Islamist group's ouster in 2001, the operation marks the first big test of Washington's new strategy to defeat the Taliban and its allies and stabilise Afghanistan. [ID:nISL507269]

With new tactics to win over the Afghan population and new commanders in place, the U.S. military is hoping to turn the tide of a war some in Washington have admitted they are not winning.

By 9.30 a.m. (0500 GMT), about eight hours after it began, there were no reports of casualties and only minor engagements involving insurgents shooting at Marines and then falling back, Marines spokesman Captain Bill Pelletier said.

There are thousands of Taliban fighters in their traditional strongholds in Helmand and neighbouring Kandahar, from which the insurgency has spread in recent months. While there were few initial skirmishes, the Taliban has vowed to fight back.

"Thousands of Taliban mujahideen are ready to fight against U.S. troops in the operation in Helmand province," Mullah Hayat Khan, a senior Afghan Taliban commander, told Reuters in Pakistan by telephone from an undisclosed location.

Afghanistan's Defence Ministry said the operation was meant to regain control of districts held by the Taliban and make it safe for Afghanis to vote in the elections.

WAVES OF HELICOPTERS

Wave upon wave of helicopters landed Marines in the early morning darkness throughout the valley, a crescent of opium poppy and wheat fields criss-crossed by canals and dotted with mud-brick homes. Entrenched fighters defied NATO forces there for years.

A Reuters reporting team drove in an armoured convoy with third platoon of Fox Company, 2nd Batallion, 8th Marines. The Marines dismounted before dawn and fanned out into the fields alongside the river as the sun rose.

Hundreds more Marines raced by ground in convoys through a barren area known as the Desert of Death.

About 4,000 Marines surged forward and thousands more were mobilised to assist them, an operation by foreign troops on a scale unseen in Afghanistan since the Soviet withdrawal in 1989.

The Marines hope by appearing suddenly and in overwhelming numbers, they can capture some of the Taliban's firmest strongholds with little resistance.

"Towns that were the Taliban heartland will fall. They will fall quickly. And hopefully they will fall without a shot. That's our intent," Nicholson said.

The 10,000 Marines in Helmand Province, 8,500 of whom arrived in the past two months, form the biggest wave of an escalation ordered by Obama. The new U.S. president has declared the Taliban insurgency in Afghanistan and neighbouring Pakistan to be America's main foreign threat.

Under Obama, the U.S. force in Afghanistan is more than doubling to an anticipated 68,000 troops by year's end, many of them diverted from Iraq. Other Western countries have about 33,000 troops in Afghanistan. [ID:nSP519740]

Up until now, British-led NATO troops in helmand have lacked the manpower to hold territory it cleared in heavy fighting.

Large areas of Helmand have been outside government control. It produces the biggest share of Afghanistan's opium crop, which accounts for 90 percent of the world's heroin.

The drug crop is closely tied to the insurgency and the Taliban are mainly funded by the opium trade. [ID:nSP501910]

Launching such a bold operation carries great risk. A protracted, bloody fight could erode support for the war in the United States, among its NATO allies and Afghans.

Taliban fighters have had years to reinforce positions among the valley's irrigation ditches and canals. They have fiercely resisted past advances.

But U.S. and NATO commanders hope a rapid, decisive victory in the Helmand Valley will prove the tipping point of the war.

"We're going to seize the population from the Taliban and never let them go," Lieutenant-Colonel Christian Cabaniss, commander of the 2nd battalion, 8th Marines, told his troops before they set out in armoured convoys. (Additional reporting by Sayed Salahuddin, Golnar Motevalli and Jonathon Burch in Kabul and Saeed Ali Achakzai in Pakistan; Writing by Paul Tait; Editing by Jerry Norton)