The Agence France Presse news agency said it passed its own photographs of the dead children to Lieutenant Colonel Christopher Garver, a US military spokesman, who said: "We've checked with the troops who conducted this operation - there were no children found among the terrorists killed.
"I see nothing in the photos that indicates those children were in the houses that our forces received fire from and subsequently destroyed with the air strike."
In Aljazeera's pictures angry villagers had gathered around the bodies, several of which were so badly charred that their faces were unrecognisable.
Local residents said that one entire family had been killed.
"The [Iraq] invasion has killed more innocent people than any other dictator"
A Ali Al-Shammarri, London, UK
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"The Americans have done this before but they always deny it," Amer Alwan, the mayor of al-Ishaqi, told Reuters news agency.
"I want the world to know what's happening here."
He also told the AFP news agency: "This is the third crime done by Americans in this area of Ishaqi. All the casualties were innocent women and children and everything they said about them being part of al-Qaeda is a lie."
He told Al Jazeera that he was calling for an international investigation into the attack.
Abdullah Hussain Jabbara, deputy governor of Salah al-Din governorate, told Al Jazeera: "Residents of the two houses [which were bombed] have nothing to do with al-Qaeda network. All the people killed are members of the same family."
Jabbara said an investigation into the incident would be carried out.
"But what is the use of opening an investigation?" he asked. "The occupation still exists and Iraqi citizens are the victims."
The US said the dead were 'al Qaeda terrorists'
Local officials and Iraqi police had said on Friday that they believed 32 civilians had been killed in the attack.
Troops raided a cluster of buildings in the area around Thar Thar lake on Friday.
The US military said in a statement on Friday the operation in Salaheddin province had been "based on intelligence reports that indicated associates with links to multiple al-Qaeda in Iraq networks were operating in the area".
The statement said troops had come under fire, and "despite efforts to subdue the remaining armed terrorists, coalition forces continued to be threatened by enemy fire, causing forces to call in close air support ... resulting in 18 more armed terrorists killed."
"This is another step closer to defeating al Qaeda in Iraq and helping establish a safe and peaceful Iraq. Coalition Forces will continue to target not only senior al Qaeda in Iraq leaders, but all terrorists regardless of their titles or positions within the community," the statement said.
The US military said AK-47 machine guns, rocket-propelled grenades, anti-personnel mines, explosives, blasting caps and suicide vests were found during the operation.
Garver told AFP news agency on Friday that the dead women would have been confirmed as combatants in a "battle damage assessment" or inspection of the site following the incident.