KABUL, Nov 9 (Reuters) - A joint Afghan and U.S. military investigation has concluded an air strike last week killed 37 civilians and wounded 35 more after Taliban militants launched an ambush from the cover of a village, the U.S. military said. President Hamid Karzai said after the incident the issue of civilian casualties was the biggest source of tension with his main backer, the United States, and called on President-elect Barack Obama to make it his priority to stop innocents being killed.

A string of mistaken U.S. air strikes this year have killed at least 150 Afghan civilians, undermining public support for the continued presence of more than 60,000 NATO-led and U.S. coalition troops in Afghanistan.

Villagers told investigators a large number of insurgents arrived at the village of Wech Baghtu, in southern Afghanistan, and used homes to fire on a joint patrol of U.S.-coalition and Afghan forces, the U.S. military said in a statement.

The militants also prevented people from fleeing their homes, added the statement, released late on Saturday.

The patrol "was taking accurate fire from the high ground and was separated from its relief unit by an improvised road block, and used close air support to suppress enemy fire", it said.

NATO and the U.S. military accuse the Taliban of deliberately launching attacks from within populated areas in order to provoke a response that leads the deaths of civilians.

"We regret this tragic loss of innocent lives and express our condolences to the families and to the people of Afghanistan," Colonel Greg Julian, a spokesman for the U.S. military, said in the statement.

Some 4,000 people, around a third of them civilians, have been killed in fighting this year as the Islamist Taliban steps up its campaign to topple Karzai's government and oust foreign troops. (Writing by Sayed Salahuddin; Editing by Alex Richardson)

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