"We believe that the war on terror is not in the Afghan villages and homes. We believe this war on terror is in the sanctuaries, training grounds and the motivational factors and financial resources beyond the Afghan borders," Karzai told the annual Munich Security Conference.
"Therefore ending operations in Afghan villages is what the Afghan people are seeking as a priority: ending raids at night on Afghan homes, ending the arrests of Afghans in their homes."
Afghanistan must regain its judicial independence completely and very soon, Karzai added.
Civilian casualties had been declining recently but "we'd like to see civilian casualties go completely", he added.
Civilian casualties inflicted during operations by international forces have caused deep anger among Afghans and analysts say they encourage people to join the Taliban insurgency.
Karzai said it was very important that foreign NGOs, international agencies and United Nations staff halted "parallel activity" to the Afghan government and work as its supporter, not its rival.
"Any activity that is conducted in the manner of functions of government by our international friends as a parallel to the Afghan government ... is undermining in reality the buildup of the Afghan state and its institutions, and is not going to work," he said.
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