US-led forces in Iraq say they have killed 20 al-Qaeda militants in an operation in the centre of the country.
Local officials say those killed were civilians, not insurgents
The air strike was ordered after troops came under fire in the Thar Thar area, north of Baghdad, a statement said.
But local officials say those who died were civilians and mostly included women and children.
Elsewhere, more than 1,000 Danish and UK troops stormed homes in Basra, in a raid the UK military described as the biggest of its kind in southern Iraq.
The US military also confirmed that a US soldier died in a roadside bomb attack in Baghdad on Thursday.
The US military said the coalition operation, in Salahuddin province, had been based on intelligence indicating that al-Qaeda-linked operatives were working there.
Ground forces were searching a cluster of buildings when they were targeted with machine gun fire, the military said in a statement.
The troops returned fire and killed two insurgents, the military said, but continued to come under fire.
The air strike was then ordered, in which another 18 people died - among them were two women. The military insists all were militants.
"We've checked with the troops who conducted this operation - there were no children found among the terrorists killed," US military spokesman Lt Col Christopher Garver told AFP news agency.
On searching the site, US troops found a weapons cache containing "machine guns, rocket-propelled grenades, anti-personnel mines, explosives, blasting caps and suicide vests", the statement said.
However relatives and local officials showed journalists the bodies of children they say had died in the raid.
Amer Alwan, mayor of the Ishaqi district east of Lake Thar Thar, said US aircraft had bombed two houses, killing 19 civilians.
Police spokesman Nasser Abdul Majeed told Reuters news agency that six women and five children were among the dead.
The joint British and Danish operation led to the arrest of five Iraqis in the Hartha district of the city of Basra.
Backed up by tanks, boats and helicopters, the forces targeted several addresses north of the city at 0300 local time.
Maj Charlie Burbridge, a British spokesman for the coalition forces, said the men detained "were strongly linked with various criminal activities: kidnapping, murder and attacks on multinational forces".
He described them as "five leaders of rogue elements of militias operating in Basra".
BBC defence correspondent Paul Wood says so many troops were used because the suspects were spread across five locations and serious opposition was expected.
There were no coalition casualties and no evidence that civilians had been hurt, Maj Burbridge said. It is not yet clear whether any suspected militants were injured in the raids.
British and Danish troops stormed five houses in a pre-dawn raid
Weapons were found in the properties, including artillery shells already wired up for use as roadside bombs, he added.
He said: "This was the largest operation of its kind that we have conducted since the invasion."
Three-quarters of the troops involved were British, drawn mainly from 19 Light Brigade.
The troops came under attack from rocket-propelled grenades and small arms fire as they carried out the raid, Maj Burbridge said.
A local spokesman for radical Shia cleric Moqtada Sadr's movement warned of reprisals following the operation, AFP reported.
The UK has 7,200 troops in the south of Iraq, mostly stationed in and around Basra.