Marjah, Afghanistan (CNN) -- The NATO operation aimed at tackling a Taliban stronghold in southern Afghanistan is making progress, officials say.
Operation Moshtarak, in the southern city of Marjah, is going "very smooth" so far, U.S. Marine Corps Lt. Col. Mark Dietz told CNN Monday.
He said the Marines had bypassed several lines of roadside bombs and were in the process of clearing the city "from the inside out."
There has been some active combat, said CNN's Atia Abawi, who is embedded with U.S. Marines in Marjah.
The Taliban is "popping up in various parts of the city," Abawi said. "We went just a couple hundred meters outside of the position that we're usually based in -- we were under gunfire ourselves."
Marjah is "practically a ghost town right now," she added. "You can't really find out where they're hiding. ... They can be anywhere."
Abawi said NATO forces are hoping to draw more "extremist fighters" out of their hiding places and into combat. Between two and three insurgents are being killed in each clash on average, she said, and NATO commanders "don't expect [fighting] to die down anytime soon."
Combined forces have been "conducting a number of mounted and dismounted patrols," according to a news release from the International Security Assistance Force.
"Elements of the combined force have been engaged in periodic small arms fire fights, and a number of insurgents have been either killed or detained," ISAF said.
The release noted that the combined force "has sustained some injuries."
Troops recovered $8.7 million worth of raw opium, Abawi reported. Clearing out poppy fields is a key part of Operation Moshtarak, the biggest offensive since the Afghan war started in 2001. The Taliban finances its activities in part through the illegal opium trade.
The operation in Helmand province focuses on Marjah and surrounding areas. Marjah, known as the country's heroin capital, is where the Taliban set up a shadow government.
The city is now the "last bastion" for the Taliban in the Helmand River valley, Dietz said.
One of the biggest challenges facing the NATO mission is attacking the Taliban while limiting civilian casualties.
On Sunday, 12 civilians died in a rocket attack by coalition troops.
ISAF first issued a statement saying the civilians were killed when a rocket hit about 600 meters (650 yards) from its intended target. A senior ISAF official, however, later said the rocket was not off target at all. The official said troops hit the building they were aiming for but did not know that civilians were inside.
The official has direct knowledge of the incident, but he declined to be named because an investigation is under way.
"It's regrettable that in the course of our joint efforts, innocent lives were lost," U.S. Gen. Stanley McChrystal, top commander of U.S. forces in Afghanistan, said in a statement Sunday.
McChrystal has given troops clear orders to avoid civilian casualties.
"Even if there is a Taliban fighter within a compound and [troops] suspect that a civilian is in there, they are not allowed to fire," Abawi reported.
A group of Afghan villagers came to the Marines with two wounded teenage boys. The military treated them and sent them by medevac to the nearest hospital.
Villagers told the troops that the Taliban were using private homes to fire at U.S. forces.
In an incident not connected to Operation Moshtarak, an airstrike by NATO forces accidentally killed five Afghan civilians and wounded two Monday in Afghanistan, the military said.
A joint Afghan-ISAF patrol in Kandahar province observed a group of people who seemed to be burying an improvised explosive device, ISAF said. The patrol called in an airstrike, but later found out that the group was not planting an IED.
"We regret this tragic accident and offer our sympathies to the families of those killed and injured," Maj. Gen. Michael Regner, ISAF Joint Command deputy chief of staff, said in the ISAF statement.
About 15,000 Afghan and NATO forces are taking part in Operation Moshtarak.
U.S. troops are leading the mission. "The majority of the fighting, the majority of the headway being made, is by the U.S. forces," Abawi reported.
She added that she had seen many Afghan soldiers "and to be quite honest with you, they're not ready to fight."
In a statement Monday, Master Sgt. Jeff Loftin, a spokesman for the NATO-led International Security Assistance Force, said forces were in the "clearing phase."
Afghan and NATO troops discovered 5,500 pounds of explosives and seized a Taliban commander responsible for small arms ambushes and roadside attacks on troops, Loftin said.
Forces were facing primarily small arms fire, he said. Several insurgents have been killed or detained and some coalition troop members have suffered injuries.
Loftin did not specify the number of militants and troops wounded or killed.
Over the weekend, provincial spokesman Dawoud Ahmadi said 27 Taliban fighters were killed. A Taliban spokesman for the Marjah area disputed the numbers, and said there had been six Taliban casualties while militants had killed 192 troops. The Taliban has often inflated casualty figures in the past.
CNN's Nic Robertson, Frederik Pleitgen, Barbara Starr and Per Nyberg and journalist Mati Matiullah contributed to this report.