Police said a dispute between a 17-year-old male and protesters culminated with the body of the youth being strung from a traffic light near Tahrir Square, the epicentre of the months-old anti-government protest movement.

Earlier, police said protesters, some of whom have accused police of not protecting them from "saboteurs", set fire to the nearby house of the young man.

Video streamed live online showed security forces withdrawing before a crowd dragged a man along the ground while people kicked him.

His body, dressed only in underpants, was then strung up by the feet from a traffic light.

The corpse was later removed and taken to a forensic morgue, witnesses said. The morgue confirmed receiving a body.

The brutal episode could radically change the situation for a protest movement that has claimed pacifism in the face of violence in which 460 people have been killed and 25,000 injured, mostly protesters.

A statement signed by "the protesters of Tahrir" shared online denounced "a Machiavellian plan aimed at tarnishing the reputation of the peaceful protesters".

The thousands of protesters in Tahrir Square "had nothing to do with this morning's events", it concluded.

As images emerged online, a Twitter account close to Moqtada Sadr addressed the Shiite cleric's unarmed "blue helmets", who deployed to protect protesters after unidentified gunmen attacked them last week.

"If within 48 hours, the terrorists responsible are not identified, the blue helmets will have to withdraw from all the places where protesters assemble," it wrote.

Powerful pro-Iran militia leader Qais al-Khazali -- who was recently targeted by US sanctions -- denounced the "chaos" he has warned of since protests began.

"How long will this chaos and lawlessness continue, these weak security forces and proliferation of weapons and dirty militias," he asked on Twitter.

Protesters accuse pro-Iran armed factions of playing a role in the killing and abduction of protesters.