Australian Defence officials have revealed two RAAF fighter jets were involved in a bombing mission in Iraq that led to the deaths of Iraqi civilians, with an Iraqi man whose family members were killed putting the civilian death toll at 35.

Key points: ADF officials believe between six and 18 civilians may have been killed, based on estimates of population density

ADF officials believe between six and 18 civilians may have been killed, based on estimates of population density A local man told the ABC the number of civilians killed was 35, including his brother and other family members

A local man told the ABC the number of civilians killed was 35, including his brother and other family members Air Marshal Mel Hupfield said the air crew made "no error" in the June 2017 mission

The US-led Coalition estimated between six and 18 civilians may have been killed in the attack but that was based on estimates of population density, not any on-the-ground research.

The incident occurred in June 2017, at the height of the bloody battle by Iraqi and Coalition forces to retake the northern city of Mosul.

Iraqi security forces came across seven Islamic State fighters, and rushed to call in a Coalition air strike.

Two F/A-18F Super Hornets were among the jets deployed to the area, both dropping GPS-guided bombs on the target.

But Australian officials have now confirmed there were innocent civilians in the proximity of the blast.

"The Coalition assesses that between six and 18 civilians may have been killed, and that's based on an assessment of population densities," Air Marshal Mel Hupfeld, Chief Joint Operations revealed.

"It's not possible to determine if the civilian casualties occurred as a result of the Australian airstrike, the nearby Coalition airstrike, or other actors."

The airstrike hit the family home of Sheikh Mohammed Ghanim el Saffar.

His brother, who is also an imam, Sheikh Ayman el Saffar, said the building was home to the extended family of Sheikh Mohammed.

Sheikh Ayman el Saffar told the ABC 35 family members had died in the airstrike. ( ABC News )

"My brother has lost all of his family. The number of the family members who died are 35," he said.

Speaking to the ABC from his home in Mosul, Sheikh Ayman said his brother's property was also used as a religious community centre.

"The house was hit, they lost money and a religious community centre. He had this religious community centre at that time he used it as his private house," he said.

"There were no activities at the community centre at the time."

Air Marshal Hupfeld said Australian forces would never take part in such strikes unless satisfied there was minimal risk, based on the advice from the Iraqi forces.

"We do know from our review of events that our air crew made no error in this mission," Air Marshal Hupfeld said.

The first reports of significant casualties were published by the website AirWars, which monitors harm to civilians as a result of airstrikes in the Middle East and North Africa.

The website initially suggested up to 50 people could have been killed.

Some local reports suggested the innocent victims could have been families.

Six-month delay between incident and Australian officials being informed

Australian officials were informed in January 2018, and a 12-month investigation followed. Investigators did not travel to the site of the airstrike as part of their inquiries because of the delay in becoming aware of the reports.

Air Marshal Hupfeld conceded that had it been clear civilians were close by, the airstrike would never have been allowed.

But, he is not prepared to blame Iraqi security forces for the situation, arguing they were under extreme pressure from IS fighters at the time of the attack.

"The assessment was that … the likelihood of civilian casualties or the civilians present there was low, but there's always the likelihood," he said.

"The action in Mosul was the most ferocious air campaign that we have seen in our generation.

"It is an unfortunate consequence of war that these civilian casualties have occurred."

Australia's bombing mission in the region finished at the end of 2017.

There have been more than 30,000 Coalition air strikes in the region, and the Australian Defence Force said it would thoroughly investigate any alleged civilian casualties in missions involving RAAF aircraft.

Air Marshal Hupfeld said any claims of compensation would be dealt with by the Coalition's central command, and not directly by the ADF.

'Great loss' for Mosul community of al Shifa

Sheikh Ayman said the Coalition airstrike was devastating to his community and to his family.

"What they did was a huge drama for our family. Half of our family was killed in that airstrike," he said.

"My cousins, my brother, my sister, all from el Saffar family. We lost many members of our family.

"We are a well-respected Mosul family, we're all well-educated, moderate and much appreciated by many."

Sheikh Ayman said he and his brother were very close.

"We grew up together, went to school together, we studied together and we would talk together about preaching at the mosque," he said.

Almost two years after the attack, the site of the airstrike has not been rebuilt. All that remains of Sheikh Mohammed's home in Mosul is a pile of rubble.

"May their soul rest in peace. It's a great loss for our neighbourhood, al Shifa," Sheikh Ayman said.

'Tremendously upsetting': Pyne

Defence Minister Christopher Pyne said it was a deeply regrettable incident but the Australians were operating entirely within the rules of warfare.

"So there'll be no discipline for the pilots involved because they were doing exactly the jobs they were supposed to do," he told Channel Nine.

"It's obviously tremendously upsetting that civilians were killed.

"We can't be sure that it was Australians but in the fullness of transparency, we're prepared to say that we could've been responsible."

Victims' families may be entitled to redress

AirWars, a London-based NGO that tracks the international air war against Islamic State using local sources, first reported the civilian casualties from the strike in June 2017 on its website.

"We had half a dozen separate reports from the ground [on the day]. We knew that all of the victims came from one extended family and four families within that larger family," director Chris Woods said.

"What was not entirely clear was how many individual family members had died, how many had been rescued from the rubble of the collapsed structures and some reports said that family members had been recovered.

"We have four specifically named victims in this incident and one of them was the imam of the local mosque. His brother also died and two close male relatives as well."

Sorry, this video has expired AirWars director Chris Wood discusses what happened when the civilian casualties were first reported.

Mr Woods said the strike occurred at a time of heavy fighting around Mosul.

"This was a fast decision process, I would assume, that the strike was called in quickly," he said.

"There wouldn't have been much time to determine the presence of civilians and the presence of civilians almost certainly wasn't known because those civilians were sheltering within the houses that were then struck."

Mr Woods said the admission of involvement may also entitle the victims' families to redress.

"We're not in any way saying that ADF has been unlawful in its actions," he said.

"We do think it's behaving in a mature and responsible manner in accepting its role in this event, stepping forward, accepting responsibility and this also opens of course the door to the affected family to reach out for potential compensation from the Australian Government for the harmed caused."

In 2017, AirWars assessed that there were between 34 and 50 civilian casualties but Mr Woods did not dispute the ADF's lower number.

"Of the 14 international members of the US-led coalition against ISIS only four have ever admitted to causing harm from their actions. That's the United States, Australia, the Netherlands and the UK," he said.

"We used to be very critical of the ADF for its poor transparency. That did improve towards the end of the ADF's active military role.

"And we've also seen significant improvement in ADF assessment of civilian harm cases and also being transparent and open about their findings when they reach conclusions. This is positive and this is something we'd like to see other militaries follow".