The US-led coalition said it had attacked insurgents in the air raid in Kandahar province, and a provincial governor said some of the militants had hidden in residents' houses.
Major Scott Lundy, a coalition spokesman told AFP: "I can confirm there was a coalition air strike against a known Taliban stronghold near the village of Azizi in the Panjwayi district, and we believe more than 50 Taliban have been killed in the operation."
"These individuals were active members of the Taliban network and have conducted attacks against coalition and Afghan forces as well as civilians," a coalition statement said.
The coalition was looking into reports of civilian casualties, Lundy added.
Injured civilians were taken to the
main hospital in Kandahar city
The air strike came amid some of the worst violence since the 2001 fall of the Taliban in Afghanistan.
About 300 people have been killed in the past week, more than twice the number reported killed in Iraq.
The governor of Kandahar, Asadullah Khalid, said that up to 60 Taliban and 16 civilians had been killed.
A spokesman for the Taliban, who are fighting to expel foreign troops and topple the elected government, said none of their fighters had been killed on Monday.
All of the casualties were civilians, he said.
"More than 60 Taliban have been killed and many wounded. Sixteen civilians have also died and 15 are hurt," the governor told reporters at the main hospital in Kandahar city, 35km east of the bombed area.
"There were reports that the Taliban were in this village, but when the US planes started bombardment, the Taliban used the people's houses as a front - that's why there were civilian casualties," Khalid said.
A young man sitting next to his wounded brother said: "Sixteen people were either killed or wounded only in my family."
Severely wounded people were brought to the city's main hospital in cars, taxis and minibuses.
They said more were on their way and others were still in the village, along with many dead.
An elderly man, Attah Mohammed, said 24 members of his family, including children, were killed in the bombing and scores more people were wounded.
"They started to bomb our village at midnight and continued up to this morning," he said, speaking at the hospital.
The area was sealed off by foreign and Afghan troops, said Mohammed, who had brought some of his wounded relatives including women and children to the hospital.
A doctor said security forces had not allowed ambulances into the area to fetch the wounded.
There have been several major battles with insurgents during the past week, including a clash in Panjwayi on Wednesday and Thursday that Khalid said left 100 Taliban dead.
Paramedics said ambulances were
not allowed to fetch the wounded
Insurgents also carried out three suicide bombings.
Separately, Afghan and coalition forces said on Monday that they had arrested a mid-level Taliban leader, who was a rebel commander for Helmand province, during an operation on Friday in neighbouring Uruzgan province.
Mulla Mohibullah was responsible for a Taliban ambush on Friday that killed one US soldier and wounded several others, it said.
About 250 Taliban fighters have been killed since Wednesday, according to Afghan authorities and the coalition.
Nearly 50 other Afghans have been killed, most of them police and soldiers, as well as four foreign soldiers.