UPDATE, January 8, 2005 - The US military says a bomb dropped by one of its planes during a mission in northern Iraq hit the wrong target and it "deeply regrets the loss of possibly innocent lives".

The bomb destroyed a villa in the village of Aaytha near the city of Mosul on Saturday. Locals said 14 people were killed, while the US military said its reports were that five Iraqis had died.

A US military statement said an F-16 fighter plane had dropped a 500-pound bomb on a house near Mosul.

"The house was not the intended target for the air strike. The intended target was another location nearby," it said.

"An investigation is underway to determine the facts regarding this incident."Reuters television footage and photographs on Saturday showed a house in the village of Aaytha, southeast of the northern city of Mosul, reduced to rubble, while locals inspected the damage.

They also showed rows of freshly dug graves where locals said the dead had been buried on Saturday.

Residents said US military vehicles had surrounded part of the village overnight, shortly before the strike in the early hours of Saturday morning.

US officials have said operations are underway to restore security to the Mosul area, where the police force has effectively collapsed, ahead of elections.

US military reinforcements have begun moving to the area and Iraqi security forces are also being beefed up.

Last year, US forces mounted frequent precision air strikes on houses in the restive western city of Falluja ahead of a major ground offensive. They said the houses were being used by insurgents and foreign fighters.

Residents said scores of civilians were killed in the air strikes, but the US military said the civilian death toll was exaggerated by doctors in the city.

In May, US Marines attacked an isolated villa in the desert in western Iraq, killing around 40 people including six women and sparking widespread anger among Iraqis.

Survivors said the house was attacked just after a wedding party and that all the victims were innocent civilians. The American military said that while a party may have been taking place, the house was a base for insurgents.

- REUTERS