Bugger! I knew about this problem but have just realised I saved last night mid-way through a civil war. Oh well, I'll see if I can mobilise fresh troops when I restart.
Morale and number of soldiers are independent of each other. If during a battle you click you soldier sprite (or draw a box round the combatants on the map), you will see both the troop numbers and the morale displayed. You might have far more troops but your enemy might have better technology so he takes less damage while destroying your troops. As far as I can tell, the battle ends when one side has either no soldiers or no morale left. That side is the loser.
If at the end of the battle you still have far more soldiers than your enemy, it is a good idea to let them recuperate a little then go back in to fight. You will never beat them on morale, but if your soldiers are not dying ridiculously quickly you might be able to kill all your enemy and win that way.