A newly married husband and wife are feared to have been killed, and two very young children injured, by an Australian airstrike on an Iraqi home in May last year.

Key points: A RAAF Super Hornet fired a GPS-guided bomb at a building where IS militants were fighting local forces

A RAAF Super Hornet fired a GPS-guided bomb at a building where IS militants were fighting local forces The ADF says "two thorough investigations" concluded it was more than likely two civilians were killed

The ADF says "two thorough investigations" concluded it was more than likely two civilians were killed Amnesty International reports a 27yo man and 20yo woman married 20 days earlier were killed

The Australian Defence Force (ADF) has revealed "two thorough investigations" have concluded civilian casualties were likely when an RAAF Super Hornet fired a GPS-guided bomb at a building in West Mosul where a pair of Islamic State (IS) snipers were engaged in heavy fighting with local forces.

"On the balance of probabilities, our strike resulted in the death of two people and the injury of two others," deputy chief of joint operations, Major General Greg Bilton, said.

The deadly strike occurred on May 3 at the height of the intense eight-month coalition-led battle to liberate West Mosul from IS, also known as Daesh.

"A single precision-guided munition was released, hitting the second storey, collapsing the defensive fighting position inside the building," Major General Bilton said.

"We deeply regret the loss of civilians, and it's not lost on people that this has happened, but at the same time we pride ourselves on trying to have absolutely zero civilian casualties."

The two investigations were launched after an eyewitness described the incident to Amnesty International, who passed the information to Airwars, a transparency project that monitors civilian harm in military operations.

"We were getting dressed to leave and my brother's family were still getting dressed and putting jackets on the children. I set off with my wife and children and we turned the corner and heard an airstrike," the unidentified witness is quoted as saying on the Airwars website.

"I ran back and the house had caved in. My brother died. My sister-in-law … also died.

"There were no Daesh around otherwise how could I have just walked out of my house?"

Minister says ADF did all it could to avoid civilian casualties

Defence Minister Marise Payne called the deaths "very regrettable", but said the Air Force did everything possible to avoid civilian casualties.

"I think it's very important for us to recognise what a very complex urban environment this was, and the fact we are operating in a war zone," she said.

"Our operators work to the highest standards but regrettably incidents like this happen."

Senator Payne said Islamic State regularly used civilians as human shields during the battle for Mosul and she denied the claim that there were no enemy snipers in the building.

"The strike was called in because the Iraqi security forces were under direct sniper attack from the building, and the sniper attack was causing injuries," Senator Payne said.

Sorry, this video has expired Marise Payne says the suspected deaths of two people during an Australian airstrike in Iraq are very regrettable

According to the Amnesty International field report, the deaths of the 27-year-old man and 20-year-old woman, who had been married just 20 days earlier, occurred in the Islah al Zirae neighbourhood in West Mosul.

The eyewitness reported that the children injured in the airstrike were his one-and-a-half-year-old nephew and his two-year-old niece.

"Those who come to apparently liberate us should know Daesh hide between us. They force us to hide them. How can the instruction tell us to stay away from them?" the relative is quoted as saying.

Major General Bilton said the Amnesty International report dated August 31 was handed the US-led coalition, which launched a "thorough assessment".

"In accordance with Operation Inherent Resolve (OIR) operating procedures the coalition conducted a thorough assessment," he said.

"Based on the information collected, OIR assessed that it was more likely than not two civilians were killed, and two civilians were injured as a result of the airstrike against Daesh fighters on May 3."

The May strike on West Mosul is the third bombing mission in Iraq involving Australian personnel that Defence believes may have resulted in civilian casualties.