The ongoing hunt for the rogue Afghan soldier tagged as the 'insider' gunman who killed three Aussie Diggers last week yielded arrests of suspects and the deaths of two suspected insurgents.

However, the ensuing Australian operation in Uruzgan angered Afghan President Hamid Karzai, who condemned a Friday raid that killed two men, described by NATO officials as 'military age' fighting men.

In a statement, Mr Karzai said the Aussie night raid was conducted without the prior approval of Uruzgan official and minus the presence of the Afghan local security forces, which he reiterated were parts of the memorandum of understanding between Kabul and the Coalition troops.

The Australians, who were running after Hekmatullah, acted unilaterally, Mr Karzai said.

"The president condemns the operation as a breach of the Memorandum of Understanding signed between Afghanistan and NATO on the special military operations," a statement issued by Mr Karzai's office said.

The Afghan leader also "has also instructed the relevant authorities to launch a full and an all-out probe into the incident so that Afghan government can take a stand as required on the violation of the mutual agreement," the statement added.

Fairfax has identified the dead 'insurgents' as 70-year old Raz Mohammad Khan and his son Abdul Jalil.

The two, Fairfax said, "had no relationship with the government or the militants ... (and) were the victims of wrong reports received by Australian troops regarding (their) relations with the Taliban," citing a statement from the provincial government of Uruzgan.

Yet according to the Australian Defence Force (ADF), the two suspected insurgents were killed while directly participating in the hostilities that ensued during the Diggers' night operation.

The ADF insisted too that proper rules of engagement were fully observed during the raid, rejecting suggestions that Aussie soldiers mistreated detained suspects including a female Afghan.

Eleven Afghans were taken into custody Friday, the ADF said, but all of them have been allowed to go home except for one, which has been confirmed by Kabul.

The lone suspect now being held by Australia is said to have aided in the escape of Hekmatullah, who remains at large after he shot to death three Diggers who have just completed a day's task Wednesday last week.

Their killings plus that of two Aussie Special Forces, who died in a chopper crash on the same day, dealt Australia its biggest combat blow since the Vietnam War.

Yet the biggest casualty in the rising incidents of 'green-on-blue' attacks in Afghanistan, which already killed seven Diggers, is the eroding trust between NATO troops and the Afghan security forces.

Over the weekend, NATO has announced that pending re-vetting and screening to be conducted on members of the Afghan army and police personnel being mentored by coalition troops, the whole training exercises will be suspended.

More than 27,000 Afghan security forces will be subjected to the whole procedure to check for possible ties with the Taliban, according to reports by The Washington Post.

Australia will also cease its training of Afghan commandos effective immediately, a moratorium that likely will last two months, The Herald Sun reported on Monday.