A man checks a crater reportedly caused by an explosion in the village of Salehan in Afghanistan on Tuesday. (A.R. Khan/Canadian Press)

A third child has died from wounds sustained in an explosion in an Afghan village that residents and relatives alleged was caused by a shell fired by Canadian troops.

The Canadian military announced Monday it was launching an investigation into the incident in the village of Salehan, about 15 kilometres southwest of Kandahar city.

Officials in Kandahar City's Mirwais Hospital identified the third victim as four-year-old Juma Gul, one of three children treated for shrapnel wounds after the explosion on Sunday.

Two other children, a 13-year-old identified as Sadar Walli and 12-year-old Amed Jan, were killed instantly.

The Canadian military has confirmed troops were in the area Sunday conducting firing exercises, but insists the soldiers followed standard procedure and swept the fields before departing.

Accounts of blast differ

The villagers and relatives of the victims gave different accounts of what they claim occurred.

A Panjwaii district elder said the children were killed by an unexploded rocket they discovered in a field around the village while scavenging for bits of scrap metal after Canadian soldiers conducted a range practice.

But Jhazi Thor Jan, the father of one of the boys who died, maintains his son was immediately killed by a stray Canadian shell landing and exploding on impact.

The father said he was a former fighter with the mujahedeen, and could recognize the sound of rockets and tell where they were fired from.

“When they were firing, our children stayed in the house and when they finished practising, our children came outside. After that they fired again,” he alleged.

“The rocket landed and exploded and killed our children. They are lying!”

But some of the village elders could not back up the father's claims.

Mohammed Zahir said he heard an explosion around 11 a.m. as children were returning from religious school.

He said he rushed out of his home to discover a chaotic scene.

"I saw the dead and injured children and yelled for help, and other people came out of their homes,” said Zahir.

“We don’t know if the rockets came from somewhere else or if they were already here.”

He said foreign troops come to the area twice a month to practise firing.

"It scares our children," he said. "They can’t sleep."

Allegations spark protest

The area around the village is "littered with all kinds of unexploded ordnance and mines," said Maj. Mario Couture, a spokesman for Task Force Kandahar.

The allegations sparked an angry protest Monday outside the provincial council office in Kandahar City.

Demonstrators shouted "Death to Canada" and "Death to America" as the blood-spattered bodies of the two children were carted off to the gates of the Kandahar governor's guest house.

On Monday, the provincial police chief blamed the Taliban for the tragedy and said Canadians could not have been responsible for the explosion.

With files from the Canadian Press