Armenia immediately denied carrying out the attack, the second in two days that Azerbaijan says killed civilians in the Barda district close to the frontline.

Yerevan also accused Azerbaijani forces of deadly new strikes on civilian areas of Karabakh, as both sides claim the other is targeting civilians after weeks of fierce frontline clashes.

The latest attacks came despite a US-brokered truce agreed at the weekend, the third ceasefire attempt in a row to collapse just minutes after it took effect.

Azerbaijani presidential aide Hikmet Hajiyev said Armenian forces had fired Smerch missiles against Barda, accusing them of using cluster munitions "to inflict excessive casualties among civilians".

The prosecutor general's office said the strike had hit a densely populated area and a shopping district, killing 21 civilians and wounding at least 70.

- Shattered storefronts -

An AFP journalist in the town of Barda saw a row of shattered storefronts, the debris scattered over boxes of fruits and vegetables, and blood pooled on the ground.

Residents gathered to survey the damage to the shops and the burnt-out shells of several cars nearby.

Azerbaijan had on Tuesday accused Armenia of another missile strike in the Barda district that killed four civilians including a two-year-old girl.

The casualties are the worst for Azerbaijani civilians since 13 people were killed in shelling on the country's second city Ganja on October 17.

Armenia has denied carrying out attacks on civilians and on Wednesday defence ministry spokeswoman Shushan Stepanyan said the latest claim was "groundless and false".

Its government said Azerbaijan had hit the Karabakh town of Shusha with rockets on Wednesday, killing one civilian, and a maternity hospital in the region's main city Stepanakert.

Karabakh's rights ombudsman Artak Beglaryan said there were "heavy casualties" in the attacks.

Azerbaijan and Armenia have been locked in a bitter conflict over Karabakh since Armenian separatists backed by Yerevan seized control of the mountainous province in a 1990s war that left 30,000 people dead.

Karabakh's self-declared independence has not been recognised internationally, even by Armenia, and it remains a part of Azerbaijan under international law.

- Failed ceasefires -

The current fighting broke out on September 27 and has persisted despite repeated attempts to bring about a ceasefire by Russia, France and the United States.

The three countries form the "Minsk Group", which has failed since the 1990s to bring about a negotiated settlement to the conflict.

A new agreement was reached in Washington for a ceasefire to start on Monday but it quickly fell apart.

This year's fighting is the heaviest since a 1994 ceasefire, raising fears that both Russia, which has a military alliance with Armenia, and Azerbaijan's ally Turkey could be further drawn into the conflict.

Azerbaijan has claimed to be making significant gains since the fighting began by retaking areas it lost in the 1990s war, in particular in a buffer zone outside Karabakh seized by the Armenians.

Armenia has admitted to suffering losses and called on volunteers to join the fighting at the front.

More than 1,000 people have been reported dead in the fighting, mainly Armenian separatist fighters but also dozens of civilians on both sides.

Azerbaijan has not released any figures on its military casualties and the death toll is believed to be substantially higher, with Russian President Vladimir Putin saying last week that close to 5,000 people had been killed.