A coalition investigation found that the airstrike triggered explosives rigged by ISIS that resulted in the collapse of the building in al-Jadidah neighbourhood.
Four civilians in a neighboring building were also killed, while 36 others are still unaccounted for. "Neither Coalition nor Iraqi forces knew that civilians were sheltered within the structure", the coalition said in a statement on Thursday. Scores of residents are reported to have been killed by coalition airstrikes in the area this month.
"As the battle for Mosul draws to an end, there is no doubt that, once uncovered, the civilian death toll will raise alarm bells about the conduct of hostilities on all sides", said Samah Hadid, Amnesty International's Middle East deputy director of campaigns. Militants then drew fire from US -backed Iraqi counter terrorism forces fighting in the west Mosul neighborhood as part of an offensive to liberate Iraq's second-largest city from the militant group. The US military has consistently said it did not know civilians were in the building.
"I am not going to agree to those numbers", said Lieutenant General Jeffrey Harrigian, who heads US Air Forces Central Command.
The spokesman for the unit said Thursday that the videos released late Wednesday - in which an Emergency Response Division officer interviews a man and a family allegedly tortured - show the allegations reported by an Iraqi photographer for the magazine are "incorrect".
The US military insists that its precision targeting abilities are the best in the world and that it takes every measure to avoid hitting civilians, including by aborting missile strikes at the last moment if a civilian unexpectedly wanders into the target zone.
The current USA strategy of isolating ISIS inside cities such as Mosul and Raqqa can place civilians at additional risk.
No condolence payments have been made, Isler said, though such a move has not been ruled out.
Prior to the March 17 strike, Iraqi forces were about 100 meters (328 feet) away and could see two snipers on the second floor of the building.
Gen. Matthew Isler, the lead investigator, said 101 civilians in the building were killed, and another four died in a nearby building.
"The secondary explosion caused a rapid failure of the structure", Isler said.
However, the strike detonated explosives that militants had placed in the building, he said.
The Pentagon report concluded that the 500 pound bomb dropped on a house to kill two IS snipers should not have destroyed the entire structure.
According to reports at the time, civilians - mostly women and children - who were being used as "human shields" by ISIS were killed in the blast.
Mosul, 400 km north of Baghdad, has been under IS control since June 2014, when government forces abandoned their weapons and fled, enabling the group to control parts of Iraq's northern and western regions.
The incident prompted worldwide condemnations because of the large number of civilians killed.