The US military in Iraq says its aircraft killed nine people in an attack on a "terrorist cell", but witnesses say the dead are civilians.
Planes were sent to bomb a house near Baquba after ground troops seeking to raid it came under fire from a rooftop, the US military said.
Coalition troops later found the bodies of seven adults, described as "terrorists", and two children.
A relative said a guard had opened fire after mistaking US troops for gunmen.
According to the US military, apart from the nine people killed, a child and three "terrorists" were wounded.
A further two suspected militants were, it said, captured during the operation in the village of Hashamiya in the early hours of Monday.
"Coalition forces received enemy machine-gun fire from a rooftop upon arriving at the objective," a US military statement said.
A funeral procession for the nine was held in Baquba
"Coalition aircraft supporting the ground force immediately suppressed the enemy fire, killing seven.
"Following the assault, coalition troops discovered two children had been killed. One child was wounded and evacuated for treatment."
The military said it had been targeting militants with "ties to senior al-Qaeda leaders across Iraq".
"This particular terrorist cell is involved in the facilitation of foreign fighters in the area," it added.
'Children and youngsters'
Mohammed Abbas, a relative of the dead, told the French news agency AFP the air strike raid had been triggered by an error on the part of the local guard.
"We were sleeping on the rooftop at midnight when one of the local guards fired in the air as he saw individuals who he thought were insurgents," he said.
"Unfortunately they turned out to be US troops on foot patrol."
He said that US forces had responded by "striking several houses first and later concentrated on one house".
Mr Abbas described the nine dead as two adults and "seven children and youngsters".
Another witness, Shahin Abdullah, said local people were not used to US troops doing foot patrols.
"They usually come in tanks and vehicles," she added.