A Nato air strike in eastern Afghanistan has killed 10 civilians, five of them children, and wounded five other children, Afghan officials said.

Civilian deaths in air strikes have been one of the most emotive and high-profile issues of the war in Afghanistan, although in recent years UN statistics show that the Taliban have caused the majority of civilian casualties.

If confirmed the latest deaths are likely to spark protests and renew tensions over civilian casualties between the Afghan president, Hamid Karzai, and the Nato-led military coalition.

A single home in the remote Sultan valley, in Kunar province, was hit by bombs around 3am on Wednesday, said Wasifullah Wasifi, spokesman for the provincial governor.

Four Taliban commanders were also killed in the attack, said Farid, chief of staff for the Kunar governor who, like many Afghans, goes by only one name.

"Four women and five children were killed, and five children wounded. One man, who was the leader of the family, was also killed, according to reports from the site," Farid told the Guardian by phone from Kunar.

"Four Taliban commanders were also killed in this incident, but it is not clear in what part of the site they were, whether they were inside the house. We have sent a delegation to the site."

The MP for Kunar, Haji Sakhi, said: "There is no government control in that area, it is all controlled by militants. Several times we have complained to ministry of defence, ministry of interior and presidential palace about it.

"Two Pakistani Taliban and three Afghan Taliban were killed. Among them was a well-known commander from the area, Qari Shah Pur," he said, adding that "seven people were also arrested by Nato, [and] those still there say they were innocent".

The Nato-led coalition declined to confirm whether there had been an air strike in the area overnight, saying only that it was looking into allegations of civilian casualties.

"We are looking into allegations of civilian casualties and we are assessing the circumstances," said a spokesman in Kabul, Major Gary Allen. "I cannot even confirm the raid or air strike. We are trying to assess what exactly did happen."

Heavy publicity around air strikes that have killed civilians in Afghanistan have sometimes meant that other types of explosions have been mistaken for such incidents.

The deaths came hours before President Barack Obama announced that he would be withdrawing 34,000 US troops from Afghanistan by the end of this year, and a similar number in 2014, which he said would bring an end to the US war in Afghanistan.

A small number of US and Nato forces are expected to stay on to help train Afghan soldiers and possibly target groups like al-Qaida in lawless parts of the country, but Obama has said they will not be involved in the domestic fight against Taliban insurgents.