The Australian Defence Force has confirmed Chora District governor and tribal leader Rozi Khan, a close ally of Afghanistan president Hamid Karzai, was among those found dead after a firefight involving special forces in the town of Tarin Kowt, near where Australian forces are based in Afghanistan's dangerous south.

Mr Karzai expressed sorrow over the killing, which he said had stemmed from a ''misunderstanding''.

Oruzgan province deputy police chief Gholub Wardak said the governor had been called to the house of a friend who believed himself surrounded by Taliban militants.

''Actually the man's house was surrounded by Australian forces and, when Rozi Khan and his men arrived there, the foreign forces mistook them for Taliban and opened fire at them,'' he said.

The governor and two of his bodyguards were killed, and another two bodyguards were wounded.

Defence said in a statement yesterday that it was not possible to say whether Australian soldiers had killed the governor, but it appears to be the latest in a series of incidents in which coalition troops have inadvertently killed Afghan civilians.

Defence said ''a number'' of Afghans including police officers were found to have been killed or wounded after Thursday's episode and it was working with Afghan authorities and the International Security Assistance Force to investigate.

Defence said, ''Initial ADF reporting indicates that the Special Operations Task Group patrol was moving on foot towards a subsequent activity when they were fired on from a number of locations by unknown attackers.''

The special forces soldiers returned fire, in accordance with their rules of engagement.

''Australian forces make every effort to minimise the risk of any damage, injury or loss of life to non-combatants in the course of their operations,'' the statement said.

''However, the ADF reserves the right to protect its own people.''

Defence Minister Joel Fitzgibbon said Australia would consider reviewing its rules of engagement in Afghanistan if a probe into the firefight found this was necessary.

''We believe our rules of engagement are quite robust and appropriate for the circumstance we find ourselves in in Afghanistan,'' he said.

''But of course we will wait for the outcomes of the investigations [and] if they make any recommendations about rules of engagement, of course the Government will consider them.''

An analyst at the Australian Strategic Policy Institute, Raspal Khosa, said if the encounter had been a ''blue-on-blue contact'', that indicated there were real problems in coordination between international and Afghan security forces.