Up to 13 civilians, mostly women and children, were killed in a NATO air strike on Thursday in the eastern Afghan province of Khost, provincial police chief Mohamad Zazai said.
The coalition said those killed were family members of insurgents who also died in the strike that was called in after Afghan-led forces came under fire.
The deaths triggered protests blocking the main highway to Kabul nearby, with civilian casualties in Western military operations extremely sensitive in war-torn Afghanistan, where the Taliban have waged a decade-long insurgency.
"Unfortunately eight women, four children, and one man were killed in a NATO air strike on a residential house in Dowamanda district early this morning," Zazai said, adding that four Taliban-linked Haqqani militants were also killed.
"The body of a Haqqani commander and three fighters have also been recovered from the vicinity of the house. A delegation has been sent to investigate the incident," he said.
A spokesman for the provincial governor confirmed that civilians had been killed in the incident but gave no further details.
NATO's International Security Assistance Force said those killed were family members of the Haqqani network, which is a target of the alliance force. It did not say how many civilians were among the dead.
A spokesman for the coalition said Afghan-led forces had gone in search of the insurgents when they came under attack by rocket-propelled grenades and small-arms fire.
"Responding to the insurgent attack, the security forces returned fire and called in an air weapons team. The subsequent air strike killed several insurgents and unintentionally a number of associated family members," he said.
The air strike came a day after provincial authorities in southern Ghazni province said two civilians were killed and one other injured in another military incident. NATO said it was looking into the allegations.
Police also said Thursday that six Afghan policemen and a civilian were killed when their car drove over a landmine in the restive southern province of Uruzgan late Wednesday.
The Taliban were not available to comment but roadside bombs are one of their most widely used weapons against the Western-backed Afghan government.
Civilians are the biggest casualties in the near 10-year war in Afghanistan, where 150,000 foreign forces are stationed.
Last year was the bloodiest yet for civilians, with the United Nations recording 2,777 fatalities.
In May this year alone, a total of 368 civilians were killed, 301 of them in insurgent attacks, according to figures released by the UN mission in Afghanistan, making it the deadliest month for civilians since at least 2007.
The UN has blamed insurgents for more than three-quarters of the civilian deaths last year, but the issue enflames anger among ordinary Afghans toward foreign forces, as they blame NATO's presence for the increased danger.
The latest civilian deaths are a reminder of the depth of the task facing the Afghan government as it takes increasing responsibility for security following the announcement of the first wave of foreign troop withdrawals.
The United States has announced that 33,000 "surge" forces will leave the war by the end of next summer, while Britain has said another 500 troops will return next year. France and Belgium have also announced limited withdrawals.
Civilian casualties are a huge bone of contention between foreign forces and President Hamid Karzai who issued a "last warning" to the military in early June to avoid "arbitrary and unnecessary" operations that kill civilians.
Those comments came after he said 14 people died in an air strike in southern Helmand province. NATO said nine civilians were killed in the strike.
In another high-profile case this year, two NATO helicopters killed nine Afghan boys as they collected firewood in northeastern Afghanistan, leading to a rare apology from the US commander in Afghanistan, General David Petraeus.