Steve Biko, one of the leading figures of black protest in South Africa, died Monday in police custody in Pretoria, the South African government announced yesterday. He was the 20th black activist to die in mysterious circumstances while in custody in the past 18 months.

The government said he died as the result of a seven-day hunger strike, but doubts as to the cause of death were quickly raised both in South Africa and in Washington. The announcement of his death was the first disclosure by the government that he was fasting.

Biko, 30, was internationally known as a moderate black voice for change but was outspoken in his protest against South Africa's racial segregation laws. As founder of the South African Students Organization, Biko had urged blacks to stand up and assert their own destiny in a nation where they outnumber whites six to own but have few rights because of the country's apartheid system.

The death of Biko, who had been arrested several times in the last five years, was expected to lead to an outpouring to protest both from within the country and internationally.

Secretary of State Cyrus Vance issued a statement saying the United States was "shocked and saddened" by Biko's death and had "expressed deep concern to the South African government over . . . the circumstances in which this occured, without his family or his attorney being notified of any deterioration in the state of his health."

"We believe that a full investigation into the circumstances surrounding Mr. Biko's death is called for. Whatever the immediate causes . . . he must be regarded as another victim of the apartheid system and the South African security legislation which supports that system," Vance said.

Two key shapers of American policy toward Africa - Ambassador to the U.N. Andrew Yong and Sen. Dick Clark (D-Iowa), chairman of the Senate Foreign Relations subcommittee on Africa - also issued statements criticizing South Africa.

South African Justice Minister Jimmy [WORD ILLEGIBLE] announcing Biko's death, said he was delained Aug. 18 in Port Elizabeth for the "compilation and distribution of written material propagating violence and arson."

He said Biko started the hunger strike Sept. 5 and during that period was seen by doctors and hospitalized. Krger did not say whether any attempt was made to force-feed the prisoners.

Port Elizabeth has been hit by a wave of racial nrest like many other South African cities since the Soweto riots of June 1976.

A Washington-based civil rights group that has fought discrimination in South Africa for a decade said, on the basis of information it obtained from South Africa, that the government's explanation of Biko's death was "patently absrd."

Millard Arnold, director of the South Africa Project for the Lawyers Committee for Civil Rights Under Law, said the group's attorney, Shn Chetty, had attended the atopsy for Biko and hinted in a garded telephone conversation that "the evidence reveals that Biko died as a result of police brutality cased by torture."

If so, Arnold added, "there may well be a case to be made against the security forces for murder." The group did file murder charges in one of last year's prison death cases and, although the charges were dismissed, the judge reprimanded the police for their conduct.

The State Department said it had received no reports about torture of Biko but said the U.S. Embassy, had been instructed to look into Biko's death.

In South Africa, Reuter news agency reported that Biko's death shocked the black community and there were renewed demands for an inquiry into why so many prisoners have died.

Within hours of the announcement of Biko's death, an imprompt memorial service attended by more than 400 persons was held in Johannesburg. The Associated Press reported that the service ended with shout of "amandla" (power) from blacks in the multiracial congregation. Speakers at tre service had denounced the country's practice of detention without trial.

Biko was also a founder of the Black Peoples Convention, which like the student organization, attempted to raise black consciousness by establishing self-help projects such as medical clinics and cottage industries.

He had been declared a banned person in 1973 meaning he could not leave his home district of King Williamstown in eastern Cape Province.

U.S. Ambassador Young compared Biko's loss to that of President Kennedy and Martin Luther King in the United States, calling is a "major loss for the future of South Africa."

Sen. Clark called on the South African government to establish an impartial investigation to report on Biko's death asserting that the government had a "despicable" record of deaths in detention under suspicious circumstances.

Clark, who met Biko on a visit to South Africa last year, said in a Senate speech: "No observer of the South African scene can accept these flimsy explanations of what is more accurately a pattern of outright racial repression conducted by an authoritarian state which permits unconscionable attacks on the black community."

Justice Minister Kruger in his statement gave details of several medical examinations of Biko during his weeklong hunger strike.