"Isaf can confirm ... a single surface-to-surface rocket strike took place near Babaji village in Lashkar Gah against a group of nine individuals whom were believed to be involved in emplacing an IED [improvised-explosive device]," an Isaf statement said.
"Isaf forces were not aware of any civilians in the vicinity at the time of the strike. Only those involved in the IED emplacement were targeted."
Karzai's office said that he had ordered a "rapid" investigation and that the president "strongly condemned the attack".
International forces in Afghanistan have come under heavy criticism from the local population and Kabul for mounting civilian deaths in their attacks.
"Isaf takes all credible allegations of civilian casualties very seriously and investigates each allegation to determine the facts," a spokeswoman said.
"If any civilians were injured through our actions we deeply regret it."
Nato forces are in Afghanistan following the US' invasion in 2001 aimed at removing the then Taliban government - accused of harbouring al-Qaeda operatives - from power.