Outrage has greeted reports that African National Congress (ANC) Youth League leader Julius Malema called Indians "coolies" at a gathering in Thembelihle, south of Johannesburg, on Wednesday.

Malema's comments showed the ANC's policy of non-racialism had been scrapped, the Christian Democratic Party said on Thursday.

"The previous government, often labelled the apartheid regime, 20 years ago scrapped the last racial legislation," Theunis Botha said in a statement.

"The ANC has over the past 17 years re-introduced numerous racial laws. Surely, it cannot claim to be non-racial," he said.

The Afrikanerbond said Malema's racial slur, directed at Indians, demonstrated the intolerance of individuals within the ANC toward minorities.

"The polarisation of South African communities will develop into a hostile climate unless the ANC act drastically and with discipline in their own ranks," chief secretary Jan Bosman said in a statement.

Malema had been addressing about 600 residents about the ANCYL's planned marches for "economic freedom" when he reportedly made the racial slur.

"Bana ba lena ba tshwanetse ba dumelelwe gore ba tsene sekolo le bana ba makula mona [your children must be allowed to go to school with coolie children]," Malema was quoted as saying by the Business Day newspaper.

The Times also reported the remark on Thursday.

Minority Front leader Amichand Rajbansi was outraged, Business Day reported.

"Mr Malema is doing great harm to social cohesion and interracial harmony," he was quoted saying.

He urged the ANC to take steps against Malema.

ANC spokesperson Keith Khoza told Business Day the party was not aware of the matter.

"But certainly we expect ANC leadership to be responsible in any pronouncement... they need not offend other communities," Khoza told the newspaper.