Last year was the bloodiest in Afghanistan since US-led forces overthrew the Taliban in 2001 but the violence fell off at the end of the year.
The chief of police in Helmand, Mohammand Nabi Mullahkhail, said 16 Taliban and 13 civilians had been killed in a Nato air strike in the remote district where British troops have been fighting Taliban for months.
But a spokeswoman for the 32,000-strong Nato force said on Friday that there was no evidence of any civilian casualties.
"Our intelligence suggests all casualties are Taliban."
She declined to give more details saying different reports of the attack were being checked.
Qari Muhammad Yusif, spokesman for the Taliban movement, has denied the report and told Al Jazeera's correspondent that no attack was carried out and no Taliban fighter or any civilian was killed in southern Afghanistan.
The Nato force says it takes all steps to avoid civilian casualties but deadly incidents do occur.
A Nato spokesman in Brussels said this week that poor communications between Nato and Afghan authorities were to blame for the killing of 31 civilians last October by warplanes during a battle with Taliban in Kandahar province.
In the first big clash of this year, Nato said up to 150 fighters were killed in a series of air and artillery strikes in the southeastern province of Paktika on Wednesday after the rebels slipped over the border from Pakistan.
The Afghan government's anger over the infiltration of Taliban from Pakistan has damaged relations between the neighbours, both important US allies in the "war on terror".
Afghanistan and its allies have been urging Pakistan to do more to end Taliban sanctuaries in the lawless border lands where Pakistani forces have also been combating fighters. US intelligence chief John Negroponte said on Thursday that it would be necessary to eliminate Taliban safe havens in Pakistan's tribal areas to end the insurgency in Afghanistan.