A Ugandan gay rights activist was killed after reneging on an agreement to pay for sex, the country's police chief told journalists Thursday.

Inspector General of Police Kale Kayihura said Enoch Sydney Nsubuga, 22, had confessed to killing activist David Kato, and "there is nothing concrete to suggest" the murder was "a hate crime."

"According to the suspect ... he negotiated with the deceased to be paid money as he was being used as a sexual partner, but that the promise was never fulfilled," Kayihura said.

Nsubuga, presented briefly to the media Thursday, confessed that after realising Kato did not intend to pay as promised, "he picked a hammer from the bathroom and hit (Kato) on the head," and robbed him, Kayihura added.

Police believe the two had a prior relationship since Kato stood as surety for Nsubuga during a January bail hearing where Nsubuga was released on remand after an arrest for theft, according to Kayihura.

Following his release from prison, Nsubuga, who has a long criminal record, began working on Kato's property doing domestic labour, Kayihura said.

Kayihura added that police were "not dismissing" the hate crime theory and cautioned the public and Uganda's media against "intolerance."

Last year Kato was named and pictured by an anti-gay tabloid called Rolling Stone in a story that carried the headline "Hang Them" in reference to gay rights campaigners.

"Whoever is talking about hanging, we are going to have to take them on. It is absolutely unacceptable," Kayihura said.

Kayihura also admonished Anglican priest Thomas Musoke for anti-gay remarks made at Kato's funeral last week.

"You don't make such statements at a funeral," he said. "God accepts everybody ... you must be sensitive."

Although engaging in homosexual sex is listed in Uganda's penal code, Kayihura said investigating such cases in not a top priority.

"At this moment in time, there are bigger crime categories that we are focusing on," he said.