Most of the victims suffocated and several broke their necks when 1300 people in the southern Narathiwat province were stuffed into vehicles for at least six hours on Monday after Thai officials used water cannon, gunfire and tear gas to break up a demonstration.
"This is tragic and a real massacre of a group of people who are just peacefully demonstrating and this will have a great effect on the feelings of southern Thai people," Muhammad Hatta, chairman of the external affairs committee of the Parti Islam se-Malaysia (PAS), said.
"This latest issue will create more instability and dissatisfaction and we are very worried that people will rise against the government."
A southern Thai Muslim separatist group dormant since the 1980s said on Wednesday its members will take their fight to Bangkok to avenge the deaths of 78 Muslims in army custody in the deep south.
"Their capital will be burned down in the same way the Pattani capital has been burned," the Pattani United Liberation Organisation (PULO) said in a statement posted on its website.
The group, which is not thought to have an armed wing, was involved in a violent campaign in the 1970s and 1980s for an independent Muslim kingdom of Pattani between southern Thailand and northern Malaysia.
"We pledge before Allah that from now on, the infidel will suffer sleepless nights, the property they have robbed from us will be totally destroyed, and their lives will face consequences for the sins they have committed," the group said.
"Their blood will be shed on the soil and flow into water. Our weapon is fire and oil, fire and oil, fire and oil."
Calls for inquiry
Amnesty International called for an independent inquiry, saying there was a "disturbing pattern of Thai security forces using excessive force" against Muslims in the south.
Hundreds were arrested and taken
away during the protest
Thailand's justice ministry said 78 people suffocated as they were being taken in trucks to an army barracks after the protest by Muslims near the border with Malaysia on Monday.
It was the bloodiest day in the Buddhist kingdom since 28 April, when troops and police shot dead 106 machete-wielding fighters in the south.
Security outposts in the Muslim-majority region have been common targets in 10 months of unrest, which looks increasingly like a revived Muslim separatist movement.
PAS's Hatta said all sides should exercise restraint and start negotiating over Muslim demands for a form of autonomy in southern Thailand.
"The army should stop all military action in southern Thailand and political leaders should go back to the negotiating table," he said.
Although they live in Thailand, the country's five million Muslims share ethnic and linguistic ties with their Malay neighbours.
Thailand's premier on Wednesday announced an inquiry into the deaths.
Prime Minister Thaksin Shinawatra stopped short of an apology after blaming fasting during the month of Ramadan and drug use among protesters for the high death toll.
Premier Thaksin Shinawatra (R)
has stopped short of apologising
"We will set up a committee to investigate why they were crowded into trucks until they couldn't breathe," Thaksin told legislators on Tuesday.
"We feel sorry. We tried to take care of them well. They should not have died. There will be a committee to investigate so that we can draw lessons from this."
Thaksin and other officials sought to partly blame the deaths on the detainees' weakness due to fasting during the Muslim holy month of Ramadan, saying they died of dehydration or suffocation.
But a forensic scientist with the justice ministry had said two or three of the detainees had broken necks.
Newspaper pictures showed detainees lying face down on the back of an open top truck at least two deep, with their hands tied behind their backs and five soldiers standing around them.
Thaksin told legislators a public holiday meant there were too few trucks to hold the detainees who could not breathe or drink water.
Tied and beaten
Hundreds of tearful family members gathered outside the military base on Wednesday to try to learn the fate of their relatives.
"Demonstrators ran away, some jumped into the canal. Soldiers and policemen beat and kicked them. They were tied up by belts or rope," one man who witnessed the break-up of the protest said.
Relatives are still trying to learn
the fate of their loved ones
"They were loaded in six trucks, piled on four or five deep. The reason they died was because they were beaten and injured and kept in a crowded area."
Officials said 37 of the 78 victims from the crush had so far been identified and 14 bodies had been taken away by families.
Thaksin said 32 people were also injured, including 14 security officials, one of them seriously.
The protest was sparked by the arrest of six Muslim security officials accused of handing guns to separatists in the Muslim-majority south, where an insurgency has raged this year. The latest deaths take the total to at least 414 from the violence.
Streets were blocked off to the police station on Wednesday as a major clear-up operation continued amid a heavy security force presence.
Bullet holes were seen in the walls of a building opposite the police station, according to an AFP correspondent.
The Hong Kong-based Asian Human Rights Commission (AHRC) said in a statement that the high death toll was "most disturbing and utterly inexcusable".
A total of 113 people were killed
in an uprising in April in the south
One Thai newspaper said the premier should consider his own position after a series of cabinet reshuffles failed to solve the crisis amid fears of growing violence.
"Prime Minister Thaksin has pinpointed possible causes of the turbulence and reshuffled the top men in charge. It's time he took a long, hard look at himself," the English-language Nation newspaper said in a front-page comment.
Rights activists have previously accused the authorities of heavy-handed tactics in the south, including the storming of a mosque in April that left 32 people dead. A total of 113 people were killed in the one-day uprising.
The insurgency in the south of mainly Buddhist Thailand has continued sporadically for decades and came to life again in January with a raid on an army depot.