Three NATO soldiers, three Afghan troops and an interpreter were also wounded in the fighting in Paktika province, near the Pakistani border, an International Security Assistance Force (ISAF) press release said.
The statement said the combined forces came under small arms fire from a group of 25 to 30 insurgents in remote Bermal district.
"After the initial clash, the ANA (Afghan National Army) succeeded in counter-attacking with small arms and close air support," the statement said.
"During the engagements near the border with Pakistan, three ANA, three ISAF soldiers and one interpreter were injured and subsequently evacuated to an ISAF hospital," it added.
"Eighteen insurgents were reported to have been killed in the incident."
Bermal is one of the most remote districts in Paktika province and has seen many similar attacks on government and foreign troops.
Afghan officials claim insurgents cross the border from Pakistan to carry out attacks on a daily basis. Pakistan denies the claims, saying it has 80,000 troops guarding the border.
This year has seen an upsurge in violence in south-eastern and southern Afghanistan, blamed on Taliban insurgents. More than 3,000 people have died, mostly militants.

Copyright AFP (Agence France-Presse), 2006