The Nato-led peacekeeping force in Afghanistan said its troops spotted 15 Taliban near a main road in Kandahar late on Tuesday.
After realising they had been detected, the men then moved to a nearby compound which Nato aircraft then bombed, said Major Scott Lundy, a Nato spokesman.
Lundy said: "11 Taliban were killed in the air strike, while two insurgents were later seen leaving the compound."
But civilians in the Zhari area to the west of Kandahar city, said the dead were farmers who had been working in their grape fields in the cool of the evening.
"Those people who died in the bombing were civilians," Ahmad Shapour, a resident of the area, said by telephone.
The killing of Afghan civilians by Nato troops threatens to weaken popular support for the US-backed government of Hamid Karzai, the Afghan president, in his war against the Taliban.
Nato also said that one of four Canadian soldiers wounded in an attack on Tuesday had died of his wounds, a spokesman said on Wednesday.
Lundy also said that a teenager had been shot dead and another wounded by Nato soldiers after the pair, who were riding a motorbike, had ignored soldiers' orders to stop near the scene of the suicide car-bomb attack.
Afghanistan urges caution
Karzai has urged foreign forces to exercise extreme caution while conducting military operations.
"I have repeatedly asked the coalition forces to take maximum caution while carrying out operations," he said in a statement after a US air strike killed 10 Afghan police on August 17.
On Wednesday, three other civilians were killed in two blasts on a road near Kandahar air base, the main base for foreign troops in southern Afghanistan, a provincial official said.
Afghanistan is going through its bloodiest phase of violence since the Northern Alliance, US-led Afghan rebel faction, overthrew a Taliban government in 2001.
About 2,000 people, including more than 90 foreign troops and scores of Afghan soldiers, police and civilians, have been killed this year.
Joint border patrols
The Afghan and Pakistani armies have agreed to conduct coordinated and simultaneous patrols with the US along their volatile border, a statement from the American-led coalition said on Wednesday.
Nato troops in charge of security in southern Afghanistan will also participate in patrols aimed at stopping pro-Taliban fighters from crossing the porous 2,450-kilometre-long (1,470-mile-long) border.
"In order to coordinate the movements along the border areas, the participants discussed and agreed to a proposal to conduct coordinated patrols ... on their respective sides of the border, simultaneously," the statement said.
Afghanistan regularly accuses Islamabad of not doing enough to prevent fighters and arms from entering from Pakistan.
Pakistan says that it has deployed more than 80,000 troops along the border at the request of the Afghan and US governments.