"There was total misinformation fed to the coalition forces," Humayun Hamidzada, the spokesman for President Hamid Karzai, told The Associated Press.
Afghan police arrested three suspects accused of giving the U.S. military false intelligence that led to the bombardment, the Interior Ministry has said.
An Afghan government commission found that up to 90 civilians were killed, including 60 children, a finding backed by a preliminary U.N. report.
The bombing strained the U.S.-Afghan relationship but the countries remain committed allies, Hamidzada said.
The operation, conducted by U.S. Special Forces and Afghan soldiers, targeted Afghan employees of a British security firm and their family members - the reason the U.S. military recovered weapons after the battle, Hamidzada said.
The U.S. has said its forces were fired on first during a raid that targeted and killed a known militant commander named Mullah Sidiq. But villagers say their homes were targeted because of false information provided by a rival tribesman named Nader Tawakil.
An Afghan parliamentarian has said Tawakil is in the protective custody of U.S. forces. The coalition has declined to comment.
"How the information was gathered, how it was misfed, and their personal animosity led to trying to use the international forces for their own political disputes, which led to a disastrous event and caused a strain on the relationship of the Afghan government and international forces," Hamidzada said.
"Not a single Talib was killed," he added. "So it was a total disaster, and it made it even worse when there were denials, total denials."
The U.S. at first said that 30 militants and no civilians were killed. A formal military investigation found that the operation killed up to 35 militants and seven civilians.
But after video images showing at least 10 dead children and up to 40 other dead villagers surfaced last week, the U.S. said it would send a one-star general from the United States to investigate the strike.
Afghanistan's Interior Ministry said Friday three suspects had been arrested for allegedly giving false information to the American military, but it did not say who they were. Hamidzada and the Interior Ministry spokesman have also declined to say who was arrested.
A U.S. military spokeswoman did not respond to an e-mail seeking comment.
Villagers had gathered for a memorial ceremony in Azizabad to honor a tribal leader named Timor Shah, who had allegedly been killed by Tawakil, the rival tribesman, about eight months ago. Villagers said families had traveled to Azizabad for the ceremony, one of the reasons so many children were killed.
The top NATO spokesman in Afghanistan, Brig. Gen. Richard Blanchette, has said the U.S. coalition, U.N. and Afghan government would hold a joint investigation, but Hamidzada said the Afghan government would not take part.
"The Afghan government did not agree to a three-way investigation, because we have already completed two investigations," he said.
"There is no need to go around to the village and actually harass people one more time and remind them of the terrible ordeal they went through. We have the facts straight, we have all the information."
Karzai has long pleaded with international forces to reduce the number of civilians killed in operations, and now the government is studying its "status of force" agreement governing U.S. and NATO operations in the country. Afghan officials are also reviewing the use of airstrikes by international forces.
Hamidzada said Azizabad strained a relationship between friends. "We can be critical of one particular issue but we are still partners," he said, adding there are ways of killing Taliban without hurting civilians.
"If we only rely on air raids, we know these are not accurate, we know the potential for civilian casualties is extremely high," he said. "So there has to be a combination of ground forces and the use of Afghan military forces. But you cannot just conduct operations from the air alone, because you hurt civilians."
In violence Sunday, a suicide car bomber attacked a convoy carrying Afghan doctors working for the United Nations in southern Afghanistan, killing two doctors and their driver, officials said.
The U.N. said it was trying to determine whether the bombing was an explicit attack on the world body or if the doctors were a target of opportunity.
Also in the Afghan south, a British soldier was killed in an explosion on Saturday, the Ministry of Defense said.
Elsewhere, seven children died after ordnance they were playing with exploded, and militants ambushed and killed seven police, officials said.