A Kenyan air strike on a camp packed with displaced women and children killed at least three and wounded scores Sunday in southern Somalia, witnesses and an aid group said.

The Kenyan army denied killing civilians and said that its strike had taken out fighters from the Islamist insurgent group Shebab, the main target of its two-week-old military operation in Somalia.

Doctors Without Borders said at least three were killed in the air raid on the camp with some 9,000 internally-displaced people and witnesses spoke of up to five victims following a strike residents said was conducted by a Kenyan warplane on the city of Jilib.

"Our staff said that around 52 people, all civilians, mostly women and children, had been wounded and that three were dead," Gautam Chapperjee, who heads MSF-Netherlands' Somalia mission, told AFP.

He said MSF staff in the region were "treating dozens of injured following an aerial bombardment on the town of Jilib that hit a camp for internally-displaced people at around 1:30 pm (1130 GMT) on Sunday."

"One of the bombs exploded near a camp where suspected members of the Shebab were distributing food to displaced families," local resident Abdikadim told AFP.

"Several people died on the spot, I saw three of them," he said, speaking from Jilib, a town 100 kilometres (60 miles) north of Kismayo, Somalia's main southern port and the Shebab's key stronghold.

"At least four powerful blasts were heard inside and outside Jilib this afternoon," Moalim Isak, another witness, said.

"At least five civilians were killed when one of the bombs smashed into an aid distribution centre," he added.

A Shebab official who spoke to AFP on condition of anonymity accused the Kenyan military of "having killed ten civilians after targeting an aid distribution centre."

A Kenyan army spokesman could not confirm the incident but had said earlier that Kenyan forces had killed around 10 Shebab fighters in the same area.

"We bombed an Al-Shebab camp, killed 10 and wounded 47," military spokesman Emmanuel Chirchir said. "We are sure about this assessment, no collateral damage, no women, no children."

Kenya sent troops across the border two weeks ago in a shock move it said was aimed at stopping operations on its soil by Somalia's Al Qaeda-linked Shebab organisation.

Nairobi's decision initially appeared to have the backing of the Somali government in Mogadishu but President Sharif Sheikh Ahmed has since complained that Kenya had no mandate to send its forces.

Observers argue that Kenya, which on Saturday called for reinforcements from other Somali neighbours, wants to create a buffer zone on the Somali side of their long and porous shared border.

In recent weeks, Somali gunmen have fished for hostages inside Kenya, snatching a British tourist after killing her husband, a disabled French woman who has since died in captivity and two Spanish aid workers from a refugee camp.

The wave of kidnappings has dealt a body blow to a crucial sector of East Africa's largest economy by raising questions over Kenya's ability to safely host a million tourists a year and one of the world's largest aid communities.