The President of Afghanistan has ordered an investigation into a night of Nato airstrikes that reportedly killed up to 85 civilians celebrating a major Islamic festival.

Hamid Karzai assembled a team of tribal and community elders from the southern province of Kandahar to find out what happened in a string of villages in the districts of Panjwayi and Pashmul two days ago.

If the casualty figures are accurate the incident would represent the largest single largest loss of civilian life since the US-led invasion of Afghanistan nearly five years ago.

The last reported incident on a similar scale was the US airstrike that hit a wedding party in the province of Uruzgan in July 2002, killing 46 people and injuring 117.

"The team will investigate the reports of civilian casualties and damages inflicted in this operation. They will also present their suggestions to the President on how such unfortunate incidents could be prevented in the future," said a statement from Mr Karzai's office.

Nato’s International Security Assistance Force (Isaf) reported yesterday that its soldiers and aircraft had killed at least 48 militants during heavy fighting in villages in Panjwayi but conceded that "credible reports" pointed to "a number of civilian casualties including women and children arising from one or more of these incidents".

According to villagers and local government officials Taleban fighters had taken refuge in civilian homes and buildings where families had gathered to celebrate the second day of Eid al-Fitr, the Islamic festival that marks the end of the holy month of Ramadan.

Those buildings were then destroyed by Nato warplanes in a night raid that lasted up to five hours.

Earlier in the week, President Karzai expressly urged Nato to take more care in bombing missions on villages where civilians might be caught in the crossfire.

Bismallah Afghanmal, a member of the Kandahar provincial council, said that 80 to 85 civilians had been killed in Tuesday's bombing runs.

"These kinds of things have happened several times, and they only say ’Sorry’. How can you compensate people who have lost their sons and daughters?" said Mr Afghanmal.

"The government and the coalition told the families that there are no Taleban in the area anymore," he added. "If there are no Taleban, then why are they bombing the area?"

Another government official, who declined to be named, said that at least 60 died

One villager, Karim Jan, said 60 to 70 died, while Haji Nek Muhammad, 50, from the village of Zangwardi said Nato troops came to the hamlet in the morning to take away the injured. A third civilian, Jamila Bibi, claimed to have lost 20 members of her family when their house was hit in the bombings.

"It was late at night, that might be the reason they didn’t know where to bomb," said Agha Lalai, a provincial council member who has been named on Mr Karzai's team of elders, which is expected to report its preliminary findings next Monday.

Today a Nato spokesman said that warplanes had used "precision strikes" against Taleban fighters who were ambushing aid deliveries and reconstruction efforts in the district and accused the militants of using civilians as human shields.

The district of Panjwayi, to the south east of Kandahar, the capital of the province that is regarded as the spiritual homeland of the Taleban, has seen some of the heaviest fighting this year in Afghanistan.

In September, Nato launched "Operation Medusa", its largest ever combat mission, and claimed to kill more than 500 militants in the region. Twenty Nato soldiers were killed.

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