He said: "These houses that were full of children and women and elders were bombed by planes.
"People are digging through rubble with shovels and hands.
"It is very difficult to say how many were killed because nobody can count the number, it is too early."
Belqis Roshan, a member of Farah's provincial council, said that fighting had broken out after Taliban fighters massed in the province near the village of Gerani.
Villagers put children, women, and elderly men in several housing compounds away from the fighting in order to keep them safe.
But the villagers said fighter aircraft later targeted the compounds, killing a majority of those inside, Roshan and other officials said.
The villagers' claims were echoed by wounded villagers who travelled to Farah's hospital for care, with some saying many family members had been killed.
Colonel Greg Julian, the top US spokesman in Afghanistan, confirmed the attack, which took place on Monday, and said that reports of civilian deaths were under investigation.
Farah's provincial police chief said that "more than 25 Taliban" and three Afghan policemen died in the fighting.
He could not confirm the reports of civilian casualties.
Civilian deaths have caused increasing friction between the Afghan government and the US, which is fighting Taliban forces in the country having driven them from power in 2001.