Libyan officials said on Sunday a Nato strike had hit a civilian house in the capital Tripoli, killing nine residents, and Nato said it was investigating the claim, which could sow new doubts about its mission.
On another front in the four-month-old battle to force out Libyan leader Muammar Qadhafi, a doctor in the city of Misrata said eight rebel fighters had been killed and 36 wounded in fighting with government troops.
In the early hours of Sunday, reporters were taken by Libyan government officials to a residential area in Tripoli's Souq al-Juma district where they saw a body being pulled out of the rubble of a destroyed building.
Later, in a hospital, they were shown the bodies of two children and three adults who, officials said, were among those killed in the air strike.
Libyan Foreign Minister Abdelati Obeidi said the Nato strike was a "pathetic attempt .... to break the spirit of the people of Tripoli and allow small numbers of terrorists to cause instability and disorder in the peaceful city."
Libyan officials earlier put the death toll at seven but Obeidi said there were nine dead and 18 wounded.
"We will never forgive, we will never forget, we are here; on our land, united with our leader, ready for peace and ready for the fight for our freedom and honour," Obeidi told a news conference.
There was no way for reporters to verify that all the bodies they were shown came from the building.
"Nato is looking into reports of civilian casualties following Nato air strikes in the early hours of June 19," the alliance said in a statement from Naples, from where it is running the Libyan operation.
"The incident is said to have occurred in a residential area in northern Tripoli, following a deliberate strike which targeted a missile site operated by pro-Qadhafi forces.
"We take all reports of civilian casualties very seriously and we will continue to look into the facts related to this event," the alliance said. "Nato would be sorry if the review of this incident did indicate that it was caused by a Nato weapon."
If it is proved that Sunday's deaths were caused by a Nato air strike, it would be the first acknowledged incident of its kind in the campaign and could weaken the fragile resolve of some countries in the alliance.
Nato has been pounding targets in Libya for months in what it says is an operation to protect civilians who rebelled against Qadhafi's 41-year rule. The Libyan leader says it is an act of colonial aggression designed to steal oil. Strains are appearing within Nato member states as the campaign drags on for longer than most of its backers anticipated and Qadhafi remains in power - even making a show of defiance last week by playing chess with a visiting official.
Sunday marked three months since Nato warplanes went into action over Libya.
US Defence Secretary Robert Gates said he believed Nato should be allowed to stick at its task. "I think this is going to end OK. I think Qadhafi will eventually fall," he told CNN.
At the scene of the destroyed building on Sunday, clothes, smashed crockery and a child's rubber duck could be seen littered around the area.
The building is in a neighbourhood where security forces have in the past few weeks put down anti-Qadhafi protests. "Why is Nato doing this to us? Why?" asked Ibrahim Ali, who said he lived on the same street as the wrecked building. "Nato is a big problem for the Libyan people. Nato doesn't have any business here, this is between the Libyan people." Another man, who gave his name as Tony, nodded towards the remains of the building and said: "They (local people) don't like this ... But they don't like the regime either."
On at least one occasion, doubts have emerged about the reliability of Libyan claims of civilian casualties. In one case, Libyan officials presented a wounded child to foreign media as the victim of an air strike but medical staff passed a note to a foreign journalist saying she was hurt in a road accident.
Rebels from the city of Misrata, about 200 km (130 miles) east of Tripoli, have been trying to push west towards the capital but on Sunday they took heavy casualties when they came under fire from pro-Qadhafi forces. A doctor at a field hospital near the frontline in Dafniyah, just west of Misrata, said eight fighters had been killed and 36 wounded.
A Reuters reporter at the field hospital said he saw a procession of pick-up trucks arriving from the front carrying the wounded and the dead, some of them covered with blankets.
"Qadhafi's forces were underground (in trenches). We were patrolling and they ambushed us," said rebel fighter Mohammed Swelhi, whose friend, Mustafa, was one of two bodies brought from the front in the back of a truck.
Last week, Nato aircraft dropped leaflets around the frontline warning pro-Qadhafi fighters they would be targeted by attack helicopters if they did not lay down their arms. But rebels say there has been little sign of the alliance.
"We don't know what Nato is doing," said the doctor, called Nury, who was tending the wounded at the field hospital.
Highlighting the strains within the alliance ranged against Qadhafi, Republicans in the US Congress have questioned the legality of the US involvement and said they could cut funding for the operation.
"Frankly, I think cutting off funding in the middle of a military operation when we have people engaged is always a mistake," Gates told "Fox News Sunday."
Speaking on the CNN's "State of the Union," Gates said "my own bet" is that Qadhafi "will not step down voluntarily, but somebody will make that decision for him - either his military or his family." Asked whether that meant someone would kill Qadhafi, Gates said, "Possibly."