The mayor of Kandahar has been killed by a suicide bomber, two weeks after the assassination of Afghan President Hamid Karzai's brother in the same city Reuters

Afghan insurgents appeared to continue their assassination campaign against key public figures on Wednesday with the killing of the mayor of Kandahar.

Ghulam Haider Hamidi was targeted by a suicide bomber who got into the municipality compound in Kandahar City with explosives concealed under his turban. The technique was first used earlier this month in a mosque in the city during a memorial service for Ahmed Wali Karzai, a regional strongman and half-brother of the president.

Abdul Manan, a municipality employee, said the mayor had emerged from his office into the garden, where he made a call on his mobile phone.

The assassin grabbed him and detonated the bomb.

"I rushed outside and saw the mayor was lying still on the ground," said Manan. "Another headless body was next to him and the mayor had deep wounds on his face and chest.''

The death of Hamidi will raise further concerns about whether military gains by the US military in the Kandahar region, particularly in districts adjoining the city, will be undermined by the remorseless killing of top public figures.

The death comes weeks after the killing in their homes of two powerful politicians in the south: Ahmed Wali Karzai and Jan Mohammad Khan, an ally of the Karzai family and a key figure in neighbouring Uruzgan province. In April, Kandahar's police chief was killed by a suicide bomber who entered police headquarters.

A recent UN report said "targeted killings" had increased in the first half of 2011 from an already high level. Assassination attempts had caused 43 injuries and 190 deaths – a 5% increase on the same period in 2010.

"Every death piles on top of the other and leads to a sense of demoralisation, that nobody is safe," said Martine van Bijlert, co-director of the Afghanistan Analysts Network.

"Previously these attacks were carried out when the targets were on the move, either in their cars or on the way to the mosque or somewhere else where they were vulnerable. But now we have this recent development where assassins are able to enter secure areas and target people there."

Hamidi, an Afghan-American who worked as an accountant in the US for 20 years, was nowhere near as politically important as Ahmed Wali Karzai. Although Karzai held an elected position as the head of the provincial council, he was a powerbroker who wielded enormous power through his control of the war economy.

US strategy in the south has been to try to build the influence of formal institutions and government officials against such informal "malign actors". Hamidi held an official position but was also very much part of the Karzai family network in the south, to which he owed his job. It had been rumoured that he might take the lead role in the province after the killing of Ahmed Wali.

As well as being a target of insurgents attempting to weaken the government in any way possible, Hamidi had made plenty of enemies among businessmen and power brokers who felt excluded from war economy contracts, projects and other get-rich schemes that have largely benefited the extended Karzai family and its tribal allies.

The fact that the Taliban's spokesmen were relatively slow to claim credit for the assassination prompted speculation that his killing could be the result of a personal grudge.

Hamidi was attacked in some quarters over the Aino Minna development, a somewhat surreal US-style suburb on the edge of Kandahar City. In part developed by Mahmoud Karzai, one of the Afghan president's controversial brothers, the scheme has been criticised for being built on land once owned by the ministry of defence that was sold cheaply after intense lobbying, some from Hamidi.

At the time of his assassination Hamidi's office was surrounded by around 100 protesters, furious at the municipality's destruction of houses built illegally on government land in recent days in the Loy Wala area of Kandahar.

One protester, Hajji Lal Mohammad, said the mayor had sparked outrage in the community where the houses were destroyed, apparently killing two children.

"They destroyed 200 houses and two children were killed," he said. "When I saw the bulldozers I also wanted to kill the mayor."

The governor of Kandahar, Toryalai Wesa, warned the "land mafia" who illegally occupy land that "you might be happy that the mayor is gone but we will stand and we will destroy illegal houses".

Although a statement by the governor's office seemed to suggest that the land issue was the reason the mayor had been killed, the governor said it was too early to say who was responsible and that the killing was being investigated.