An American soldier is in custody after allegedly killing at least 16 civilians, mostly women and children, in a pre-dawn shooting spree in Afghanistan's southern Kandahar province.

The BBC is reporting that the gunman left his base at 3:00am, travelled to a nearby village, and entered three Afghan homes.

In one, he woke all 11 family members, gathered them together and shot them dead before burning their bodies.

In nearby homes he killed five others. Most of the victims were killed by a single shot to the head, including the children.

The soldier, believed to be a staff sergeant, gave himself up and is now in US custody.

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The killing spree has raised new questions about the long-term viability of the US mission in Afghanistan and looks sure to further inflame tensions in the country.

Afghan president Hamid Karzai condemned the slaughter as "unforgivable" while US president Barack Obama called the shootings "tragic and shocking".

In a statement, Mr Karzai said the victims included nine children and three women.

The statement quoted a wounded 16-year-old, who was shot in the leg, as telling Mr Karzai by phone that the US soldier entered their home in the dark, woke up his family members and then shot them.

"The government and the people of Afghanistan demand an explanation from the United States government of this incident," Mr Karzai said.

"When Afghan people are killed deliberately by US forces this action is murder and terror and an unforgivable action," Mr Karzai said in statement.

NATO's International Security Assistance Force said it had arrested a soldier over the incident, and the commander, General John Allen, condemned "this deeply appalling incident".

He also vowed to hold "fully accountable" anyone found responsible for the killing spree.

"I cannot explain the motivation behind such callous acts, but they were in no way part of authorised ISAF military activity," his deputy, Lieutenant General Adrian Bradshaw, said in a statement as the US rushed to offer condolences.

"The United States extends deepest condolences to the families of today's tragic shooting and we're saddened by this violent act against our Afghan friends," a State Department spokeswoman said.

Sorry, this video has expired 'Lack of strategy': Jim Molan talks about the shootings in Afghanistan

The US embassy in Kabul sent out an alert to its citizens in Afghanistan warning that as a result of the shooting "there is a risk of anti-American feelings and protests in coming days".

An AFP reporter at the scene of the killings counted the bodies of 16 people, including women and children. In one house, an elderly woman screamed: "May God kill the only son of Karzai, so he feels what we feel."

One local woman, Gul Bashra, said her two-year-old child was among those killed in the shootings.

"They killed a child who was two years old," she said.

"Was this child a Taliban? Believe me, I have not seen a two-year-old Taliban yet. There is no Taliban here. The Americans are always threatening us with dogs and helicopters during night raids."

The soldier accused of the killings was arrested outside the base after the shooting by members of the Afghan National Army, the army corps commander in southern Afghanistan, Abdul Hameed, said.

The massacre was the latest in a series of incidents that have badly frayed US-Afghan relations, complicating negotiations on a strategic partnership agreement between the two countries for when US combat operations end in 2014.

Relations plunged to an all-time low last month after the burning of Korans at a military base near the Afghan capital, sparking anti-US protests in which some 40 people died and forcing Mr Obama to apologise.

During the protests, six American soldiers were killed when Afghan colleagues turned their weapons against them.

Afghan resentment of US forces has also been provoked by a video posted online in January showing US marines urinating on the bloodied corpses of slain Afghan insurgents - an incident condemned by the Pentagon.

And in November, the ringleader of a rogue American military "kill team" charged with murder for shooting civilians for sport was found guilty and sentenced to life in prison by a military panel.

'Deepest sympathy'

Barack Obama calls Afghanistan's president Hamid Karzai from his car in Maryland after the shooting ( US White House: Pete Souza )

In Washington, senior members of Congress moved swiftly to head off another backlash.

Senator John McCain, a former military officer and prisoner of war, urged calm.

"It's one of those things you cannot explain except to extend your deepest sympathy to those victims and see that justice is done," he said.

Lindsey Graham, a member of the powerful Senate Armed Services Committee, echoed Senator McCain's sentiments.

"This is tragic and will be investigated and that soldier will be held accountable for his actions under the military justice system. Unfortunately these things happen in war," he said.

The killings have triggered fresh calls for the US to pull out of Afghanistan.

The conservative Republican presidential candidate Newt Gingrich called for America to reconsider its role there.

"I think it's going to get substantially worse, not better. And I think that we're risking the lives of young men and women in a mission that may frankly not be doable."

The Australian Government has described the incident as "horrible" and "appalling", but Prime Minister Julia Gillard says it will not affect the ADF's plans.

"It's not going to distract us from our purpose in Afghanistan and our clear sense of mission in Afghanistan. We know what we're there to do, we know the time frame that we are doing it on, and our commitment remains clear," she said.

Kandahar is a stronghold of Taliban insurgents fighting to oust Mr Karzai's government, which is supported by some 130,000 US-led NATO troops.

ABC/AFP