Western air strikes sparked fresh controversy in Afghanistan on Wednesday as NATO said a bombing killed eight civilians and the US military estimated that up to 30 villagers died in an attack this month.

The announcements came after Afghan President Hamid Karzai demanded an end to air strikes by foreign forces helping his government fight a Taliban insurgency, because of the growing and increasingly controversial civilian death toll.

NATO soldiers on patrol in the southern province of Helmand on Tuesday came under attack from about 25 insurgents, the alliance's International Security Assistance Force (ISAF) said.

"Finding it difficult to extract themselves from this dangerous situation, ISAF troops resorted to calling for close air support," it said.

A plane dropped a bomb. "Tragically, it is believed that eight civilians were killed as a result of the air strike," it said.

ISAF accused the attackers of sheltering among the civilian population.

The soldiers "were not aware that the insurgents were once again using civilians as human shields," the statement said. "If this information had been known by ISAF troops, no ordnance would have been used."

The ISAF media office in Kabul said it could not tell AFP if the targeted insurgents had also been killed.

The level of civilian casualties at the hands of international forces deployed to Afghanistan to tackle the militant threat is a deeply sensitive issue that has sparked violent demonstrations and calls for the foreign troops to leave.

The Afghan government says 140 civilians, including about 95 children and teenagers, were killed this month in what may be the deadliest such incident since the 2001 invasion that drove the Taliban from government.

Afghan and foreign troops called in the strikes while engaged in heavy fighting in the southwestern province of Farah on May 4-5.

The US military previously said it could only confirm that "a number" of people were killed, charging that all the bodies had been buried before its investigators arrived at the scene of the battle in the Bala Buluk area.

But a new and ongoing investigation by US Central Command estimated at least 20 to 30 civilians may have been killed as well as 60-65 Taliban, the military said in a statement released in Kabul on Wednesday.

Investigators reviewed video from aircraft scrambled to the fight and audio recordings of conversations between a ground commander and air crew, it said.

"In all, the investigation team estimates that 60-65 Taliban extremists were killed in these engagements, while at least 20-30 civilians may have been killed during the fighting."

It again accused the insurgents of using villagers as "human shields" by fighting from their compounds.

"A review of the physical evidence is inconclusive in determining the exact number of civilian and insurgent casualties," the statement added.

Investigators were unable to exhume graves as it was culturally unacceptable, said US military spokesman in Kabul, Colonel Greg Julian.

The investigation was continuing and the team would share its information with the Afghan government and the International Committee of the Red Cross, the spokesman said.

Karzai travelled to Farah on Tuesday to meet survivors and reiterated his demand for US forces to "stop bombing" civilians.

The US military has promised to review its operations and use of air power in order to reduce the risk to civilians.

Tensions over non-combatant deaths peaked last August when civilians were killed in US air strikes in the western province of Herat, which adjoins Farah.

Afghan and UN teams said around 90 civilians were killed; the US military said 33 civilians and 22 militants died.