Thousands of civil servants were to demonstrate in Athens against staff cuts on Wednesday, hours after an anti-fascist artist's murder, allegedly at the hands of a suspected neo-Nazi, raised social tension.

Pavlos Fyssas, a 34-year-old hip hop artist and anti-fascist, was stabbed to death early on Wednesday morning in the western Athens district of Keratsini, reportedly after a football argument.

Police said they had arrested a 45-year-old member of the Golden Dawn neo-Nazi group in connection with the killing.

Golden Dawn immediately denied any connection, but the incident is likely to inflame the precarious social situation in Greece where anger is simmering over four years of austerity cuts.

On Monday, at least 17,000 teachers and civil servants took to the streets to protest against new government plans for massive public sector redeployments and layoffs.

Two separate demonstrations are planned in Athens on Wednesday, with civil servants joined by hospital doctors, municipal workers and teachers.

Greece's union of civil servants has called a two-day strike over the latest job overhaul.

Overall, Greece has pledged to axe 4,000 state jobs and redeploy 25,000 public sector workers by the end of the year, in return for its much-needed rescue loans.

Civil servants have to accept new posts or spend eight months on reduced salaries as alternative posts are found, with the risk of losing their jobs altogether.

Hard hit by the economic crisis, Greece is experiencing a sixth year of continuous recession and has a staggering 27-percent unemployment rate.

Conservative Prime Minister Antonis Samaras, who heads a tenuous coalition with the socialists, this week said the Greek economy is likely to need another six years to return to pre-crisis levels.