The US occupation force also acknowledged the Saturday air strike.
At a press conference in Baghdad, Brigadier General Mark Kimmitt said he did not dispute Iraqi accounts that over 20 people were killed in the strike.
He said there was "significant intelligence" that members of Abu Mussab Zarqawi's network were in the house, but there was no evidence Zarqawi himself was there.
Witnesses had confirmed earlier that US warplanes carried out the strike around 10 in the morning.
They said the victims were crushed under the rubble after two missile strikes demolished the house. Relatives brought 22 bodies for burial at a cemetery after the blast.
Today's air raid is the first attack on the town 50km west of Baghdad after US marines withdrew at the beginning of May after a month of fierce clashes.
Aljazeera's correspondent in Baghdad, Abd Al-Adhim Muhamad, said several Falluja residents told him by phone that US warplanes had hovered over the city and eventually fired two missiles.
A US delegation was in the city last week to sign a "Trust Memorandum".
"At 9:30am a US plane shot two missiles on this residential area," said the Falluja police chief, Sabbar al-Janabi, as he surveyed the wreckage. "Scores were killed and injured. This picture speaks for itself."
Rescue teams searched the scene for other victims. At least two houses were destroyed and six others were damaged in the poor residential area.
Outraged residents accused the Americans of trying to inflict maximum damage by firing two missiles. "The number of casualties is so high because after the first missile we jumped to rescue the victims," said Wissam Ali Hamad. "The second missile killed those trying to carry out the rescue."
The remains of the vehicle hit by
a bomb west of Basra
Meanwhile in Basra, southern Iraq, a roadside bomb blast has killed a Portuguese worker and two Iraqis, Iraqi police said.
Police officer Abdul-Ilaah Mohammed said the bomb was detonated as the Portuguese telecommunications worker's car drove past on a highway west of Basra, flipping it over several times.
"The body of a Portuguese man, registered under the name of Roberto Carlos, working for (telecommunications) company Al-Atheer, was brought to Basra hospital after an attack on the road to Zubair," said Ismail Mulla, an official with the emergency services.
An Iraqi internal security office in the Baghdad suburb of al-Amiriya was attacked Saturday with rocket-propelled grenades killing and wounding several Iraqis.
A lorry with a supply convoy for US contractor Kellogg Brown and Root (KBR) also came under attack north of Baghdad, officials and witnesses said.
"A vehicle was struck by an IED (improvised explosive device) or RPG," said a US soldier at the scene. "It was part of a KBR convoy, and nobody was hurt."
Local residents in the Shuala district of Baghdad said troops guarding the convoy opened fire and arrested two men after the attack.
On Friday, a KBR contractor was wounded and a US soldier killed in a mortar attack on a base in the capital.