SYDNEY - FIVE Afghan children were killed and a number of civilians injured in a firefight involving Australian troops and insurgents in Afghanistan's southern Uruzgan province, the military said on Friday.

The defence department said Australian soldiers were conducting 'clearance operations' in compounds on Thursday when they were fired on by Taliban rebels and returned fire.

'No Australians were injured in the engagement, but a number of people have been killed and wounded during this incident,' its statement said.

'Current reporting indicates that those killed include a suspected insurgent and, sadly, local nationals including five children killed, and two children and two adults injured.' The injured were treated on the spot before being evacuated to medical facilities, the statement said, adding that the defence force had launched an investigation into the incident.

'Defence is obviously concerned about any loss of life. It is for this reason that Australian forces operate under strict rules of engagement that aim to avoid and minimise civilian casualties,' the department said.

The latest incident comes after the government announced last month that an investigation was underway into allegations that Australian soldiers caused civilian casualties during fighting in Afghanistan.

The probe centres on charges that up to nine Afghans were wounded and others killed during fighting between international forces and Taliban insurgents in Uruzgan province in early January.

The killing of Afghan civilians by foreign soldiers is a sensitive issue in the war-ravaged country where more than 60,000 international troops are trying to restore security following the ousting of the Taliban regime in 2001.

Australia has around 1,000 troops serving in Afghanistan, most of them in Uruzgan, a former Taliban stronghold. -- AFP