The joint force came under attack during a raid on compounds suspected of housing militants in Waza Khwa district, in Paktika province, and in the ensuing battle several Taliban fighters, but also civilians - including a woman and a child - were killed, a coalition statement said.
"While conducting a search of a compound ... Taliban fighters opened fire and threw several grenades at Afghan and coalition forces," spokesman Maj. Chris Belcher said.
"Afghan and Coalition forces countered the attack with a combination of small-arms fire and precision munitions strikes effectively neutralizing the threat to the team," he said.
The building housing the militants was destroyed and several coalition soldiers were wounded in the fighting, the statement said, adding that "coalition forces found several adult males, an adult female, and one child dead" in the building housing the militants.
Initially, the coalition said there were no civilian casualties.
The military said it will launch an investigation into the incident, while blaming militants for using civilians as cover.
In the restive south, meanwhile, an explosion killed a British soldier and wounded two others Thursday, the British Ministry of Defense said in a statement.
The dead and wounded soldiers were from the 1st Battalion The Royal Gurkha Rifles and they were attacked as they returned from operations in Kandahar, approximately 30 kilometers (19 miles) west of Kandahar city, the statement said.
The casualties were evacuated by helicopter to a medical facility at the largest coalition base in the region, Camp Bastion.
Britain has some 7,000 troops in Afghanistan, where they are engaged in fierce, and increasingly bloody, fighting against the resurgent Taliban in Helmand.
Eighty-two British personnel, including 57 soldiers, have been killed in Afghanistan since operations began there in November 2001.