The killings in the Taghab valley of Afghanistan's eastern Kapisa province were the latest in a series of incidents that have seen Afghan troops turn on Western allies.
French President Nicolas Sarkozy said all French operations on the ground were being suspended and his defence minister was dispatched to clarify the situation in Afghanistan.
"If the security conditions are not clearly established then the question of an early return of French forces from Afghanistan will arise," said Sarkozy.
France has almost 4,000 troops in Afghanistan as part of the 130,000-strong NATO-led force there. French troops mainly patrol Kapisa, a mountainous province near Kabul. They are due to leave by around the end of 2013.
NATO said four soldiers were killed. French Foreign Minister Alain Juppe told a news conference about 15 others were wounded, eight of them seriously.
The Taliban did not claim responsibility for the attack, but told Reuters that an Afghan soldier had killed eight French troops. The Islamist group often exaggerates accounts of engagements with foreign forces and casualties.
NATO has been rapidly expanding the Afghan security forces so that they will be able to take over all responsibility for security when Western combat forces leave in 2014.
Previous incidents in which Western troops were killed by Afghan colleagues have been blamed either on Taliban infiltration of the Afghan military, or on stress, indiscipline and divided loyalties within the hastily trained Afghan ranks.
"It is incomprehensible and unacceptable that Afghan army soldiers assassinate French troops," Juppe told reporters.
Afghan President Hamid Karzai, who is due in Paris on Jan. 27 to sign a cooperation treaty, expressed his "deep sadness and condolences to the families of the victims".
The Taliban said they could not confirm whether the killer was a Taliban member, but signalled such attacks were part of its strategy.
The Taliban "has skilfully placed the Taliban inside enemy ranks who have carried out attacks, however it is not clear whether the shooter belonged to the Islamic Emirate," spokesman Zabihullah Mujahid said in an emailed statement, using another name that the Taliban use for themselves.
Insurgent Maulvi Jamilur Rahman, who identified himself to Reuters as Taliban commander of Kapisa, said the Afghan soldier had been in contact with his fighters. "Now we are in control of a major portion of the area," Rahman said.
Karim Pakzad, associate researcher at the French Institute for Strategic Relations in Paris, said the move by Sarkozy was playing into the Taliban's hands.
"The Taliban are stronger than ever and want to impose their conditions on negotiations, and these attacks are a way to accelerate the departure of NATO troops," he said.
Jimmie Cummings, spokesman for the NATO-led International Security Assistance Force in Kabul, said: "There is no indication that these incidents are linked or part of any larger coordinated effort."
More than 2500 foreign troops have died in Afghanistan since the NATO-led war began in 2001. The latest killings take the French toll to 82.
"The way they were killed isn't new," Pakzad said. "Since NATO decided to increase the Afghan army to 300,000 soldiers recruitment has been done haphazardly and that has made it much easier for the Taliban to infiltrate the Afghan army."
Dozens of foreign soldiers have been killed in recent years by what NATO dubs the "insider threat".
Two French Foreign Legion soldiers and one American were killed in separate episodes of so-called "green-on-blue" shootings last month, which refer to the colours of the Afghan army and the symbol of NATO. The coalition no longer releases the number of its troops killed by Afghan soldiers.
French Defence Minister Gerard Longuet said he would report back to Sarkozy by next Tuesday after his trip to Afghanistan.
Sarkozy may be tempted to announce an early withdrawal for domestic reasons, three months ahead of a presidential election. An opinion poll in May showed more than half of French voters back withdrawal. Sarkozy's Socialist rival Francois Hollande has pledged to pull out by the end of this year if he wins power.
"The new position announced by the president goes against all previous statements which had stayed loyal to the coalition line of a progressive withdrawal," Pakzad said. "Without a doubt this statement has been taken with internal politics in mind."
