Friday's air strike by US jets was called in by a German commander
Germany's Chancellor Angela Merkel says she "deeply regrets" any loss of innocent life, after civilians were killed in an air strike in Afghanistan.
But Mrs Merkel told parliament that Germany's mission in Afghanistan remained necessary.
There has been heavy criticism of the strike, ordered by a German commander.
The chief of international forces in Afghanistan, US General Stanley McChrystal, has visited the scene and concluded that civilians were killed.
The incident happened on Friday, when US jets, responding to a German request, bombed two oil tankers that had been hijacked by the Taliban. Many people nearby were killed.
Mrs Merkel said in a speech to parliament on Tuesday: "Every innocent person killed in Afghanistan is one too many.
Three weeks before Germany's general election, no single topic has dominated the campaign or managed to grab the public's interest. Until now. The Kunduz air strike has made Germany's mission in Afghanistan a key election issue.
In parliament Mrs Merkel expressed her "deepest regret" but backed Germany's role in the Nato mission, arguing that it was in the interests of national security.
She won the support of her coalition partner, the centre-left Social Democrats. But she faced stinging criticism from opposition parties. The Greens called the air strike a "disaster". The left-wing party, Die Linke, restated its election promise - to bring German troops home.
With polls indicating that nearly two thirds of the German public are against the Afghanistan mission, that could influence the way Germans vote on 27 September.
"Any innocent person killed or hurt, including through German actions, I deeply regret."
"It is important to me as German chancellor to express this today, and to the Afghan people, and I think I say this in all your names," Mrs Merkel told MPs.
She promised a thorough investigation and said: "I will ensure that we will not put a gloss on anything."
Germany's mission in Afghanistan is opposed by many Germans, and the controversy has piled pressure on the government less than three weeks before general elections.
The independent Afghanistan Rights Monitor group says up to 70 civilians died in the raid, in Kunduz province.
Gen McChrystal made an Afghan TV address, promising a full investigation and stating that "nothing is more important than the safety and protection of the Afghan people".
Gen McChrystal has made avoiding civilian deaths a priority since taking over the alliance's Afghan campaign.
The Nato air strike targeted fuel tankers hijacked by the insurgents.
The German commander apparently feared they would be used to launch a suicide bombing on the German base nearby.
But at the time of the strike, the vehicles had apparently become stuck in a river bed. It is thought local people had gathered round, helping themselves to free fuel.
The air strike has caused strains between the German and US military, and was strongly criticised by Afghan President Hamid Karzai.
"What an error of judgment! More than 90 dead all because of a simple lorry that was, moreover, immobilised in a riverbed. Why didn't they send in ground troops to recover the fuel tank?" he said in an interview with the French newspaper Le Figaro.
"General McChrystal telephoned me to apologise and to say that he himself hadn't given the order to attack," he added.
But German Defence Secretary Franz Josef Jung has defied calls to resign over the incident - the deadliest involving German troops since World War II - and a defence ministry spokesman insisted the decision to attack was "militarily necessary and correct".