The head of NATO has acknowledged that civilians may be among the dozens of people killed in an air strike that destroyed two hijacked fuel tankers in northern Afghanistan.

NATO Secretary-General Anders Fogh Rasmussen told reporters that "a number of Taliban were killed and there is a possibility of civilian casualties as well" in a pre-dawn raid that reportedly killed more than 70 people on Friday morning.

The air strike happened near the northern village of Omar Khel in Kunduz province. The resulting explosion burned many bodies beyond recognition.

The German military, which has troops serving with NATO in Kunduz province, said the tankers were hit at about 2:30 a.m.

A NATO spokesperson said fuel tankers are often used in suicide attacks, which partially prompted the bombing on Friday.

The Taliban stole the fuel tankers near a German military installation, German deputy defence minister Thomas Kossendey said.

According to a Taliban spokesperson and a member of the local governing council, about 500 people flocked to the trucks after the Taliban started giving out free fuel from the truck.

"The Taliban called to the villagers, 'Come take free fuel,'" said Abdul Moman Omar Khel, a member of the Kunduz provincial council. "The people are so hungry and poor."

The tankers were hit by two 500-pound bombs from U.S. aircraft. Germany called in the strike and said no civilians were in the area at the time the bombing was called in.

Earlier Friday, the NATO command said a "large number of insurgents" were killed or injured, though an Afghan police officer said about 40 civilians died in the attack.

Afghan officials say more than 70 people may have died.

U.S. Navy Lieut. Cmdr. Christine Sidenstricker, a public affairs officer, said NATO attacked only after determining that no civilians were in the area.

However, NATO spokesperson James Appathurai told Â鶹´«Ã½ Channel that teams from the UN, the Afghan government and NATO are investigating the bombing.

"There's plenty of people who can look and sift through the facts. We want to know what happened, we want to know who are the victims and we want to know why," Appathurai said. "It is not always the easiest thing to tell in Afghanistan, as you can imagine, because the Taliban doesn't wear uniforms."

Afghan President Hamid Karzai said he would create a panel to investigate the incident.

"Targeting civilians is unacceptable for us," he said Friday.

Five members of the same family were killed in the air strike, Khem said, and another man lost three sons.

Mohammad Omar, the provincial governor of Kunduz, said that 90 people died during the attack. He said four Chechen fighters and a Taliban commander were killed.

The director of the Kunduz hospital said 12 people were being treated for severe burns, including a 10-year-old boy. But Humanyun Khmosh said he did not know if the other patients were civilians or insurgents.

The top NATO commander, Gen. Stanley McChrystal has ordered cutting back the number of air strikes to limit the risks to Afghan people.

Fogh Rasmussen said NATO remains committed to protecting the Afghan people and to minimizing the number of civilian casualties during its operations.

"It is a focal point for our ISAF troops to minimize the number of civilian casualties," he said, referring to NATO's International Security Assistance Force.

Overall, NATO has cut down civilian casualties by 95 per cent, so far this year, Fogh Rasumssen said.

With files from The Associated Press