Speaking from the town's main hospital on Thursday, Dr Mushtaq Talib said three women and five children were killed and another 15 were injured.
The victims, from just three families, were taking shelter in a couple of houses that were completely destroyed during the third successive night of air strikes, locals said.
Families living in the northern Nuwab al-Dhubat quarter were particularly shaken after the attack after whole houses became holes in the ground.
Local journalists report that the areas attacked are not only crowded, but that no armed men were in the district at the time of the attack.
Khalid Abbas, a neighbour to one of the houses completely destroyed, told journalists: "We were sleeping on the roof because the electricity keeps going off at night. When the the explosion went off, the blast threw me back by at least five metres.
"First I thought the explosion was in my house but when I awoke from the shock I saw that the neighbours had been hit." Abbas said two women and 10 children had lived in the house next door.
"All the children next door used to fill the streets with noise. Today I hope they will be like birds in heaven," Abbas said. "I want to know why the Americans decided to bomb a family with children."
The humanitarian situation is also reported to be deteriorating fast as hospitals in the area continue to suffer major shortages in medical supplies.
Dr Talib showed journalists bloodied children laying on hospital beds from the previous night's attack.
Fallujans dig to remove a body
from the remains of a home
At the end of the air raid, residents with flashlights began searching for more victims in the rubble.
US marines have been fighting Iraqis opposed to a foreign military presence in Falluja for months, but the intensity of battle has increased dramatically in the last three days.
But a US military statement described its missile attacks on Falluja as a "precision strike" on a site used by supporters of Abu Musab al-Zarqawi, a Jordanian who the Americans say is a key al-Qaida operative.
"The target was a building frequently used by terrorists," the statement said. "Three al-Zarqawi associates were reported to be in the area, no other individuals were present at the time of the strike."
However, locals say al-Zarqawi is not even in the town and that on each occasion missile strikes have been used civilians were killed.