Britain's four-year military stewardship of the troubled Helmand province has been scorned by President Hamid Karzai, top Afghan officials and the US commander of Nato troops, according to secret US diplomatic cables.

The dispatches expose a devastating contempt for the British failure to impose security and connect with ordinary Afghans.

The leaked US embassy cables covering Afghanistan also reveal:

• Widespread suspicion of high-level corruption in the Afghan government, with one cable detailing how the vice-president was carrying $52m in his suitcase when he was stopped at Dubai airport.

• Iran's growing influence in Afghanistan as Tehran finances senior politicians and, the cables allege, trains Taliban militants.

• Anger among America's allies when they discovered that the US military was charging a 15% handling fee on hundreds of millions of dollars being raised internationally to build up the Afghan army.

The criticism of the British operation in Helmand centres on its failure to establish security in Sangin – the town which has become totemic as the place that has claimed more British lives than any other in Afghanistan.

The Helmand governor, Gulab Mangal, told a US team led by the vice-president, Joe Biden, in January 2009 that American forces were urgently needed as British security in Sangin was inadequate and did not even extend to the town's main bazaar, according to a cable sent from the US embassy in Kabul. "I do not have anything against them [the British] but they must leave their bases and engage with the people," Mangal said.

In another cable in January 2009 the governor, who has received strong backing from the UK and the US, is reported to have delivered a scathing dressing down to British officials on the state of security in Sangin.

"Stop calling it the Sangin district and start calling it the Sangin base – all you have done here is built a military camp next to the city," he said. British troops, the same cable reported, told US officials that immediately outside the town "cowboy country begins".

The problem was not a lack of troops, according to Mangal. Even if they brought in thousands more, "they would need a new plan and shift of focus to connect with people", he told Biden.

At the time the British effort was paralysed as it awaited a surge of US troops and the vast discretionary Cerp (commander's emergency response programme) funds enjoyed by US commanders, the cable said. "The UK effort in Helmand is already in a 'wait and see' mode, wildly speculating when and where US troops will go, obsessed about Cerp amounts, and doing nothing to correct the difficult situation already in Sangin," the embassy reported.

Karzai repeatedly muses to his US interlocutors on why the arrival of British troops coincided with a rapid deterioration in security in Helmand in 2006. In the aftermath of the US-led invasion of Afghanistan in 2001 Karzai recalled that he entered the south of the country with just 14 US special forces and that soon afterwards "even Helmand was safe for girls to go school. Now, 4,000 [sic] British soldiers are in Helmand and the people are not safe".

On several occasions Karzai is reported to have disparaged the UK military and blamed its approach – which rejected his preferred "tribal solution" of appointing an alleged drug trafficker as provincial governor – for the absence of security in Helmand.

At a meeting with Senator John McCain in December 2008 he said he was relieved that US marines were being sent to reinforce the British-led mission in Helmand and "related an anecdote in which a woman from Helmand asked him to 'take the British away and give us back the Americans' ".

In another meeting with US officials, Rangin Dadfar Spanta, then foreign minister, expressed disappointment at the ordering of an extra 2,000 British soldiers to Helmand, arguing "they were not ready to fight as actively as American soldiers".

The UK military effort in Helmand, which has grown to 10,000 troops and a cost of more than £5bn a year, is criticised by top US officials, who fear the British have bitten off more than they can chew with Afghanistan's largest and most troublesome province.

In late 2008, with concerns turning to security for the following year's presidential election, the embassy said that without US support "we and Karzai agree the British are not up to the task of securing Helmand". Mangal appeared to agree, saying that US marines were providing the "right model" in Garmsir, another Helmand town. They had remained in place for long enough to allow the bazaar, schools and clinics to reopen. A successful handover had then been planned to ensure the new security zone could be maintained by the UK and Afghan security forces. "Unfortunately, the UK has not built on the US achievement by expanding the security zone around Garmsir still further," the cable said.

The British operation also attracted criticism from Dan McNeill, the commander of Nato forces in 2007-08, for its failure to deal decisively with the drug trade in Helmand. In mid-2007 McNeill was said to be "particularly dismayed by the British effort. They had made a mess of things in Helmand, their tactics were wrong, and the deal that London cut on Musa Qala had failed," he is reported as saying of a ceasefire agreement with the Taliban that allowed the British to pull besieged troops out of the town of Musa Qala in 2006.

"That agreement opened the door to narco-traffickers in that area, and now it was impossible to tell the difference between the traffickers and the insurgents. The British could do a lot more, he said, and should, because they have the biggest stake," he said.

Britain's presence has steadily increased since it first deployed units in Helmand in 2006. But a senior Whitehall official, Philip Barton, told the US embassy that "the cupboard was bare" and Britain could not deploy any more troops to Afghanistan.

The US embassy commented: "HMG wants to be completely in synch with the US when the president announces the rollout of our strategy in Afghanistan. [Gordon] Brown's government is eager to avoid the inevitable loss of political capital that would result if the media and Conservative and Liberal Democrat opposition pounce on an apparent disconnect between US and UK views on the way forward in Afghanistan.

"Another factor driving British thinking is increased irritation at some allies who, in the UK's view, are not pulling their weight in Afghanistan. Interlocutors most frequently cite Germany and France in this regard".