Nato said it believed the dead were all Taliban fighters, but it was investigating reports civilians were also killed. Villagers said their relatives were collecting fuel from the hijacked trucks and were burned alive in a giant fireball.
President Hamid Karzai's office gave a death toll of 90 and said an investigation team had gone to the scene.
"No civilians must be harmed during military operations," Karzai said in a statement. "Targeting civilians under no circumstances is acceptable."
The incident, which took place in the northern province of Kunduz, could reignite outrage against foreign troops two months after the new US and Nato commander in the country announced measures to stop civilian deaths he said were undermining the war.
Lieutenant-Commander Christine Sidenstricker, press officer for the US and Nato-led International Security Assistance Force (ISAF), said Afghan authorities had reported two fuel trucks hijacked. Nato aircraft spotted them on a river bank.
"After observing that only insurgents were in the area, the local ISAF commander ordered air strikes which destroyed the fuel trucks and killed a large number of insurgents," she said.
"The strike was against insurgents. That's who we believe was killed. But we are absolutely investigating" reports of civilian deaths, she said.
Asked how pilots could know whether a crowd around the trucks included civilians, she said: "Based on information available at the scene, the commanders believed they were insurgents."
The incident took place near the border with Tajikistan, in a part the country once seen as safe but where Taliban attacks have become increasingly frequent and fighters have asserted control of remote areas. The Taliban consider fuel shipments a strategic target because Nato forces depend on them.
The Kunduz area is patrolled mainly by Nato's German contingent, barred by Berlin from operating in combat zones further south. The incident could add to controversy about Germany's participation in the war, which is unpopular back home.
Germany confirmed that its commander in the area gave approval for the aircraft to open fire. A Defence Ministry spokesman in Berlin said it believed more than 50 fighters were killed and had no information about deaths of civilians.
British Foreign Secretary David Miliband called for a "prompt and urgent investigation".
"It is a vital time for Nato and Afghanistan's people to come together," he told SKY news. "We have a very strong Nato commitment, we need a strong Afghan commitment and obviously incidents like this can only undermine that."
Preventing civilian deaths has been one of the main themes of the new ISAF commander, US Army General Stanley McChrystal, who took command in June and says the main goal of the war is to defend Afghan civilians, not hunt down insurgents.
Under orders he issued in July, aircraft are not supposed to fire unless they are sure there is no chance civilians can be hurt or are responding to an immediate threat.
Provincial officials, who themselves could face a backlash over civilian deaths, said fighters were killed as well as civilians. Provincial Governor Mohammad Omar said he believed half of those killed were militants, while provincial police chief Abdul Razzaq Yaqubi said 55 of the 90 dead were fighters.
"My brother was burnt when the aircraft bombed the fuel tankers. I don't know whether he is dead or alive," said weeping villager Ghulam Yahya, one of dozens of relatives gathered outside Kunduz Central Hospital in the provincial capital.
Mohammad Sarwar, a tribal elder in the province, said Taliban fighters had hijacked the tankers and were offering fuel to a crowd of villagers when the tankers were bombed.
"We blame both the Taliban and the government," he said.
Mohammad Humayun Khamosh, a doctor at the Kunduz hospital, said 13 people arrived there for treatment. Reuters reporters saw several young men with severe burns arrive by ambulance.
A Taliban spokesman, Zabihullah Mujahid, said fighters had captured the two fuel tankers. One had become stuck in mud by a village, and the fighters went to try to tow it when residents gathered to take the fuel and the crowd was struck.
US President Barack Obama has made stabilising Afghanistan a foreign policy priority although public support for the war has eroded as US combat deaths have risen to record levels.
Obama has ordered 21,000 extra troops to Afghanistan this year, continuing an escalation begun under former President George W. Bush. More than 103,000 Western troops are in Afghanistan, including 63,000 Americans.
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