ALLEGATIONS of animal cruelty and inhumane slaughter at a knackery in Melbourne's western suburbs have sparked outrage.

The claims have forced two zoos to cancel their orders of horsemeat.

Animals Australia is complaining about the treatment of horses at Laverton Knackery, saying one animal had been dragged by a tractor for 60 metres while still alive, Fairfax Media reports.

The group uncovered mistreatment of Australian cattle in Indonesia last year, and now alleges the facility breaches animal cruelty, hygiene, welfare, and meat industry laws.

The RSPCA is investigating the complaints.

Having seen footage of one of the incidents, Melbourne Zoo and Werribee Open Range Zoo have ended agreements with the knackery. Zoos Victoria, which runs Healesville Sanctuary, is now reviewing its position.