International forces have pledged to avoid civilian deaths in recent months, but insurgents often live among villagers making them vulnerable during nighttime raids.
Seven insurgents were killed and four detained after the attack in Laghman province on a compound of a militant leader responsible for directing several suicide strikes in the region, NATO said in a statement.
Afghan and international forces came under fire as they assaulted the compound, sparking a gunbattle, it said.
A statement issued by the presidential palace said six civilians were killed during the firefight, including one woman. Provincial officials said 12 people were killed in the clash outside the provincial capital of Mehtar Lam, some of them civilians, but did not specify a number.
However, NATO spokeswoman Capt. Jane Campbell said there were "no operational reports to substantiate those claims of harming civilians, including women and children during this operation."
About 400 people marched on Mehtar Lam to protest the deaths, carrying bodies of some of the dead, said provincial government spokesman Sayed Ahmad Safi.
Groups of men laid the blanket-wrapped bodies on wooden cots, which they hoisted above them as they walked, footage from Associated Press Television showed.
"Whoever came onto the roof of their home, they killed them. Some were killed inside their houses," said Ismail, a villager who only gave one name and said he lost seven members of his family. "All those killed were innocent villagers, farmers. The Americans even killed our women."
The protest turned violent as the demonstrators tried to enter the city. They clashed with police and one protester was killed, Safi said.
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