The missiles were deadly accurate. In the pitch dark of a night in Pakistan's sparsely populated North West Frontier Province, they not only located the three targeted houses on the outskirts of the village of Damadola Burkanday but squarely struck their hujra, the large rooms traditionally used by Pashtun tribesmen to accommodate guests.

Yesterday some of the results of the strike were very clear: three ruined houses, mud-brick rubble scattered across the steeply terraced fields, the bodies of livestock lying where thrown by the airblast, a row of newly dug graves in the village cemetery and torn green and red embroidered blankets flapping in the chilly wind. Four children were among the 18 villagers who died in the brutally sudden attack on their homes.

Yet evidence emerging appeared to indicate that, though the technology that guided the missiles to their targets at 3am on Friday was faultless, the intelligence that had selected those targets was not. Even as American military and intelligence sources spoke of the possible death of Ayman al-Zawahiri, the second-in-command of al-Qaeda and the man considered to be the brains behind the militant group's strategy, Pakistani officials said that there was no evidence any 'foreigners', shorthand locally for al-Qaeda fighters, were among the 18 victims, though they said that 'according to preliminary investigations there was foreign presence in the area'.

In a bid to distance themselves from what was looking like a tragic and counter-productive tactical error that had cost many innocent lives, Pakistan announced it would file a formal protest with the Americans. Information Minister Sheikh Rashid Ahmed told a news conference that the Pakistani government wanted 'to assure the people we will not allow such incidents to recur,' adding that the government had no information about al-Zawahiri.

'We deeply regret that civilian lives have been lost in an incident. While this act is highly condemnable, we have been for a long time striving to rid all our tribal areas of foreign intruders who have been responsible for all the misery and violence in the region. This situation has to be brought to an end,' he said.

But his words did little to calm the anger in and around Damadola, a bastion of conservative religion and tribal chauvinism, and elsewhere in Pakistan. The village lies in the semi-autonomous Bajur tribal region around 120 miles northwest of Islamabad, the Pakistani capital. It is a rugged and desperately poor region, until recently a centre of opium cultivation, where local men habitually go armed and government authority is limited to main roads. Thousands of local men marched in a series of protests yesterday, one crowd attacking the office of a US-funded aid group. In another incident, police were forced to fire tear gas to disperse as many as 400 protesters chanting anti-American slogans and waving banners condemning the Pakistan President, General Pervez Musharraf.

Musharraf, who came to power in 1999, has maintained a difficult and domestically unpopular alliance with Washington since 2001 and has deployed unprecedented numbers of troops on bloody operations to capture senior al-Qaeda figures. However, to the Americans' intense annoyance, he has not granted US forces in Afghanistan the right to cross the border into Pakistan, even in pursuit of militants. American-led coalition forces clashing with militants in the mountainous province of Kunar, immediately adjacent to Bajaur which lies a mere four miles from the frontier, say they have often been frustrated by their enemies' use of Pakistan as a sanctuary. Yesterday the Pakistani Foreign Ministry took pains to point out that 'in all probability [the village] was targeted from across the border in Afghanistan'.

Tensions between Washington and Islamabad have grown in recent weeks as American troops have stepped up operations against militants. Pakistan has already lodged a protest with the US military six days ago after a reported US airstrike killed eight people in the North Waziristan tribal region, an almost deserted area of mountains 300 miles south of Damadola. In Damadola itself, locals said they had never sheltered any al-Qaeda or Taliban leaders, let alone al-Zawahiri, an instantly recognisable 54-year-old Egyptian-born ex-doctor.

'This is a big lie... Only our family members died in the attack,' said Shah Zaman, a jeweller who lost two sons and a daughter in the attack. 'They dropped bombs from planes and we were in no position to stop them... or to tell them we are innocent. I don't know [al-Zawahiri]. He was not at my home. No foreigner was at my home when the planes came and dropped bombs.' Haroon Rashid, a member of parliament who lives in a village near Damadola, told The Observer that he had seen a drone surveying the area hours before the attack.

'A drone has been flying over the area for the last three, four days, and I had a feeling that something nasty was going to happen,' he said in a phone interview. 'There was no foreigner there - we never saw a single foreigner here. They were all local people, jewellers and shop-keepers, who used to commute between Bajaur and their village. We knew them.'

The dead were reported to include four children, aged between five and ten, and at least two women. According to Islamic tradition, they were buried almost immediately. One Pakistani official, speaking anonymously, told The Observer that hours before the strike some unidentified guests had arrived at one home and that some bodies had been removed quickly after the attack. This was denied by villagers.

US and Pakistani officials have also said that the missiles were launched from American pilotless predator drones, which have previously been used to target senior al-Qaeda figures. A man alleged to be al-Qaeda's third-in-command was killed in a 'stand-off' missile attack around a month ago. However, several eyewitnesses spoke of seeing planes and illuminating flares over the village, which if true would indicate the use of missiles from planes guided in by special forces teams on the ground rather than CIA-operated drones.

Obaidullah, a local doctor, said he saw the airstrike from his home about five to six kilometres away. 'There was one plane flying (overhead). Then more planes came. First they dropped light and then bombs,' he said. If US troops have crossed the frontier from Afghanistan in pursuit of militants, it would be a major diplomatic incident and a domestic disaster for Musharraf.

The Americans have become increasingly frustrated by their inability to catch al-Zawahiri, whom analysts see as the strategic mentor of Osama bin Laden. Al-Zawahiri was already a hardened Egyptian militant when he joined bin Laden, a Saudi Arabian six years younger, in the late 1980s to form the al-Qaeda group out of the remnants of Arab 'mujahideen' who had fought the Russians in Afghanistan. After masterminding a series of attacks, culminating in the 11 September atrocities, from camps in Afghanistan in the late 1990s, al-Zawahiri has been on the run. However, this has not stopped him providing broad strategic direction for the international Islamic militant movement and, through appearing in frequent propaganda videos, becoming almost as well known as bin Laden himself. Despite a huge manhunt and a $25m reward, he has escaped capture. Strong local sympathy for al-Qaeda fugitives in the harsh hills that line the Afghan frontier with Pakistan has been a major advantage.

'The Americans are really not much closer to finding him than they were years ago,' said one intelligence analyst. 'They are hunting in an area that is about a thousand miles long and two hundred miles wide. That is a tough job by anyone's standards.' The carnage at Damadola indicates that the hunted is still a step ahead of the hunters.

The Al-Zawahiri file

· Born 1951, Cairo. Son of a chemistry professor. A trained paediatrician.

· Travelled to Pakistan in 1985 after being arrested, imprisoned and tortured in sweep of militants following killing of President Sadat.

· Spent 1991-1996 in Sudan with Osama bin Laden before moving to Afghanistan.

· A key theorist of modern Islamic militancy, he developed strategy of using spectacular violence against American interests to 'wake up the masses'.

· From series of mountain hideouts along Pakistan -Afghanistan frontier he has issued videos and communiqués aimed at inspiring militants