Turkish military prosecutors on Tuesday cleared five army officers accused of perpetrating a botched air strike on Kurds in 2012 that killed dozens of people including children.

But the ruling was immediately denounced by Kurdish groups and representatives of the victims' families as unacceptable.

In December 2012, Turkish fighter jets bombed the town of Uludere on the Iraq border, killing 34 smugglers including 19 children in an attack Kurdish politicians described as a "massacre" of civilians.

The army had said it had carried out the strike after a spy drone spotted a group moving towards its sensitive southeastern border in an area known to be used by Kurdish militants.

"Members of the Turkish Armed Forces acted in accordance with the decisions adopted by the Council of Ministers and the law," the army prosecutor's office said.

It was referring to a government edict authorising the army to bomb Kurdistan Workers' Party (PKK) hideouts in the northern Iraq.

"The army personnel made an unavoidable mistake while performing their duties," the prosecutor's office said, dropping the charges against five army officers implicated in the case.

Tahir Elci, the head of the bar association in the Kurdish-majority city of Diyarbakir which represents the families of victims, denounced the ruling as "unacceptable" and said it plans to appeal to the Constitutional Court.

"We could not expect any another decision from a military court," he was quoted as saying by CNN Turk television.

The pro-Kurdish Peace and Democracy Party (BDP) also slammed the ruling as "unfair", with co-leader Meral Denis Bektas saying: "These people died for nothing."

Kurds have long considered the case as an important step in the fragile peace process between the Turkish state and the PKK, which has waged a deadly armed struggle for an independent state since 1984.

The peace process stalled in September after Kurdish rebels announced they were suspending their retreat from Turkish soil, accusing the government of failing to deliver on promised reforms.