The British soldiers at Hamburger Hill, a tiny base in the badlands of southern Helmand, sit on two frontlines of the Afghan war. One is vigorously contested; the other entirely abandoned.

The base - a 100ft (30 metres) high mound of sandy soil, machine guns and Scottish soldiers - is located across the river from a Taliban-controlled village. The latest fighting erupted at lunchtime yesterday when the insurgents opened fire on a British helicopter. It ended moments later when a bomb dropped from a Harrier jet slammed into their position, killing at least four insurgents, officers said.

But the other frontline is even closer to Hamburger Hill. A sea of poppy fields surrounds the hilltop base, starting at the barbed-wire perimeter fence. "As you can see, we are surrounded 360 degrees by poppy," said Sergeant Brian Russell of 5 Scots A Company, standing behind a Javelin rocket launcher.

From his hilltop bunker, Sgt Russell enjoys an intimate view of the Afghan poppy trade. He pointed to a group of turbaned men in a nearby field, hunched over pink-flowered poppy plants. Armed with sharp blades, they were gently extracting an oily black substance from the opium-laden bulbs. "They start after dawn and don't finish till last light," he said.

Thousands of seasonal workers have come from Lashkar Gah, the provincial capital 33 miles to the north. They come for the daily wage of £10 - a princely sum in these parts. The opium gum they coax from the poppy bulbs is collected in glass jars, then handed to a man on a motorcycle. The soldiers sometimes speak to the poppy workers. "Yesterday we gave some sweets to the kids. Through the interpreter the adults said: 'We are pleased you are here, thanks for your help'," said Sgt Russell.

Sometimes they even help them. When one poppy worker arrived at the camp gate suffering from heat exhaustion recently, he was referred to the main base in Garmser town, less than a mile away. He was treated by a military doctor. "We're not much interested in what they are doing with the poppy," said Sgt Russell. "We know it's going on but we're soldiers, not politicians. And we're here to do a good job."

The difficult job of fighting Afghanistan's drug war continues. After last year's record harvest, another good year for the drug lords is predicted. Western officials forecast only a small fall on last year's harvest of 193,000 hectares (480,000 acres), which supplied 93% of the world's opiates.

"Last year saw a decrease in cultivation in the north and an increase in the south. This year that trend will be strengthened," said Christina Oguz of the UN Office on Drugs and Crime in Kabul.

There is some good news. A bitterly cold winter will lower crop yields significantly. The number of drug-free provinces, which rose from six to 13 in 2007, is expected to rise again, some say to as many as 21 of Afghanistan's 28 provinces. The most dramatic triumph occurred in south-eastern Nangarhar, last year's No 2 poppy-growing province. This year the Nangarhar crop has collapsed to virtually nothing thanks to a muscular campaign led by the strongman governor, Gul Agha Sherzai. The coup is connected to national politics - Sherzai has ambitions of contesting next year's presidential elections.

But in Helmand, where thousands of British soldiers are fighting the Taliban, little has changed. Last year, the vast southern province accounted for about half the total crop; this year will probably yield a similar proportion. The opium glut is creating addicts locally as well as abroad. A five-year-old boy was recently admitted to a clinic in Laskhar Gah, one British official said. The police force is also riddled with addicts.

US-funded efforts to destroy the crops with tractors and sticks have produced meagre results. This year's campaign left several eradication workers dead, dozens more injured and destroyed just 4,000 hectares of poppy - a sliver of the total. But officials are pleased that some major drug cultivators were hit. About a fifth of the crop of Abdul Rahman Jan - until two years ago the provincial police chief - was destroyed.

Garmser is a major hub of the Helmand trade. From here smugglers head across the "desert of death", as it is locally known, to the Pakistani border 120 miles away. But Garmser is also a major centre of cultivation, fed, ironically, by American-funded irrigation canals built in the 1960s. From their base in the deserted town, British officers know this only too well. A surveillance camera hanging from a white balloon floating over the camp offers a bird's eye view of the local drug lord's house and his flourishing crops.

As elsewhere, the trade is closely linked to the insurgency. Fighting has lulled recently as the Taliban allows the harvest to take place. Recently the insurgents called a shura ("consultation") in Amir Agha, five miles to the south, and ordered villagers to grow poppies. "The Taliban are getting money from the drug dealers and distributing it among their soldiers," said a local intelligence chief.

But for the British, interference with the poppy crop is out of the question. "We have to be pragmatic," said Major Neil Den-McKay, officer commanding of 5 Scots A Company.

"Right now we cannot set the conditions where counter-narcotics operations would be beneficial to British forces in Garmser. And let's face it, if we cannot provide an alternative livelihood to people, we must just accept it."

The British officer said he was "sometimes sympathetic" to the predicament of poor Afghan farmers. Britain has a responsibility to tackle the problem at home, he said.

"Before we start banging a drum about what is right and wrong, we should reduce the demand in the UK."

As dusk drew over Hamburger Hill on Sunday, workers streamed out of the fields and back towards their lodgings. A British convoy heading back to Garmser base passed them in a £1m Mastiff vehicle, equipped with the latest battle armour and surveillance cameras.

From the top of the Mastiff, the British could see into the labour compounds, where people were setting fires and laying out rugs for an evening meal.

In the dusty street outside, some children waved at the passing soldiers. The work-weary adults were less impressed. Some flung a handful of pebbles at the passing vehicle. But most just ignored the foreign soldiers, and turned into the houses for their evening meal.