The US military has denied reports a helicopter fired on a school in Iraq but confirms seven people died in an attack against militants in the area.
The US said its helicopter was firing on insurgents
Iraqi security sources had said a US helicopter killed a number of children at a primary school in Diyala province, north-east of Baghdad.
The US said it had attacked insurgents placing a bomb, killing two of them.
US troops on the ground said locals told them five civilians, including two children were also killed.
The US forces said the insurgents had been spotted operating an illegal checkpoint near the town of Mandali, close to the border with Iran. An attack helicopter fired on them after they were seen placing the bomb.
The US military statement said local people identified the militants as bomb makers.
In addition to those killed, three people were wounded in the attack, the local people said.
The US statement said: "The cause of the civilian casualties is the subject of an ongoing Task Force Lightning investigation."
The Iraqi sources had said the al-Hadef primary school in the village of al-Nedawat was fired on.
There has been an escalation of violence in Diyala in recent weeks.
On Sunday, a convoy of US armoured vehicles was hit by a bomb which killed six soldiers and a Russian journalist who was travelling with them.