A NATO official in Naples, Italy, said the alliance has not conducted any strikes in that area in the past 24 hours. The official spoke on condition of anonymity because of NATO regulations.
Gadhafi's regime has repeatedly accused NATO of targeting civilians in an attempt to rally support against the alliance's intervention in the country's civil war. NATO has repeatedly insisted it tries to avoid killing civilians.
Libyan government spokesman Moussa Ibrahim said alliance bombs struck the compound belonging to Khoweildi al-Hamidi outside the city of Surman, some 40 miles (60 kilometers) west of Tripoli, around 4 a.m. local time Monday.
Ibrahim said al-Hamidi, a former military officer who took part in the 1969 coup that brought Gadhafi to power, escaped unharmed but that three children were among those killed, two of them al-Hamidi's grandchildren.
"They (NATO) are targeting civilians ... the logic is intimidation," Ibrahim said. "They want Libyans to give up the fight ... they want to break our spirit."
Foreign journalists based in the Libyan capital were taken by government officials to the walled compound, where the main two-story buildings had been blasted to rubble. A pair of massive craters could be seen in the dusty ground, and rescue service workers with sniffer dogs were searching the rubble in search of people. The smell of smoke was still thick in the air.
Journalists were later taken to a hospital in the nearby city of Sabratha, where medical workers showed them the bodies of at least 10 people, including those of two children, said to be killed in the strike. Some of the bodies were charred beyond recognition, while others had been half blown apart.
NATO, which has a mandate to protect Libyan civilians, has rejected the Libyan government's allegations that it targets civilians. However, mistakes have occurred.
The alliance acknowledged that one of its airstrikes on Sunday accidentally struck a residential neighborhood in the capital, killing civilians.
A coalition including France, Britain and the United States launched the first strikes against Gadhafi's forces under a United Nations resolution to protect civilians on March 19. NATO, which is joined by a number of Arab allies, assumed control of the air campaign over Libya on March 31.
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Associated Press writer Don Melvin in Luxembourg contributed to this report.
