DAVEYTON, South Africa (AFP) - South Africa on Thursday opened a murder investigation into the death of a Mozambican taxi driver who was filmed being dragged by a police van through the streets, in a case that has sparked widespread outrage.

Video footage taken by a bystander shows 27-year-old Mido Macia tussling with half a dozen police officers before being handcuffed to the back of a police van and dragged to a local police station in Daveyton, east of Johannesburg, on Tuesday.

A large crowd of horrified bystanders looked on, some warning the uniformed officers they were being filmed. "Hey! Hey! Why are you hitting him?" one person in the crowd can be heard shouting in Zulu.

Kicking and struggling to avoid the tarmac, Macia was taken into custody at Daveyton police station and was found dead less than two hours and 25 minutes later, according to investigators.

A post mortem found the cause of death was head injuries with internal bleeding.

South African President Jacob Zuma condemned the killing as "horrific, disturbing and unacceptable".

"No human being should be treated in that manner," he said in a statement.

The Independent Police Investigative Directorate said it had opened a murder investigation.

"We are investigating an incident involving the death of man, allegedly at the hands of the police. We are shocked by the footage which has been released," said Independent Police Investigative Directorate spokesman Moses Dlamini.

"The circumstances surrounding his death are still allegations... let's find out what really happened," he said.

The police watchdog and witnesses said two officers initially confronted Macia for parking his Toyota Avanza taxi illegally.

Eyewitnesses said Macia had been trying to get his driving license back from the police when an altercation occurred. But witnesses denied police suggestions the victim had tried to disarm one of the officers.

"He was just pushing them, not trying to take the gun," said George Nxumalo, a 57-year-old Daveyton resident.

Around half a dozen officers were at the scene soon after, some clad in stab vests and at least one brandishing a pistol.

The taxi driver was found dead in his cell at around 21:15 (1915 GMT).

Footage of the incident spread quickly online, sending shockwaves through the country.

Daveyton residents marched on the police station on Thursday after claiming they were dispersed with pepper spray the day before.

"They are criminals in uniform, we don't want them, we want the law to take its course, otherwise we will take the law into our own hands," said Bongani Hlela, a street trader based at the taxi rank were the incident occurred.

"Just because he was Mozambican does not mean that he should be treated badly. We are all African, we have rights," he added.

The Mozambique government said it was "outraged by what happened".

"It is very sad that a life was lost so stupidly," Foreign Affairs Minister Oldemiro Baloi told reporters in the capital Maputo.

"I think that whatever perspective you want to attach to it -- either human or the relations between the two countries -- it is absolutely unacceptable."

South African police commissioner Riah Phiyega expressed "deep concern" about the incident, saying it was being viewed "in a very serious light".

The police department said no officers had been suspended yet in the case.

Macia's death is the latest in a series of crises to hit the country's beleaguered police service, which was pilloried for the shooting deaths of 34 miners last August and for its handling of the Oscar Pistorius case.

"This appalling incident involving excessive force is the latest in an increasingly disturbing pattern of brutal police conduct," said Noel Kututwa, Amnesty International's southern Africa director.

The Independent Police Investigative Directorate received 720 new cases for investigation of suspicious deaths in custody or in other policing contexts from April 2011 to March 2012, according to Amnesty.

The opposition Democratic Alliance party called for a full investigation by South Africa's human rights commission and for the officers involved to be suspended.

"Macia paid for parking on the wrong side of the road with his life. Instead of issuing him with a ticket, the police killed him," said shadow police minister Dianne Kohler Barnard.