The 48-year-old died around 90 minutes after he was hit by a Taser in Meadow Close in the Trench area of Telford at around 1.30am on Monday.
Dalian's dad Ernest Atkinson, 85, lives in Meadow Close and the footballer was believed to have been visiting him when police were called.
The former footballer's father said: "He was in a real state. He was very agitated and his mind was upset.
"The last thing he said to me was 'don't move' when the police came to the door.
"He was threatening and very upset. I didn't call the police but someone else did.
"He got tasered in the street outside in the road. I didn't see him but I saw a flash. I haven't had any sleep and cannot take it in."
This evening, the Independent Police Complaints Commission released more details about its investigation which it said would be a 'thorough examination of the circumstances surrounding the death'.
It said: "West Mercia Police were called to a property in Meadow Close, Trench, at around 1.30 am earlier today. Two police officers initially attended the address and whilst in contact with Mr Atkinson outside the property one of the officers discharged a Taser. Further police officers then arrived. Mr Atkinson became unwell and an ambulance was called. He was treated at the scene and taken to hospital where he was later pronounced dead.
"West Mercia Police referred the incident to the IPCC, and the IPCC sent investigators to the scene and to oversee police post incident procedures.
"Since this morning IPCC investigators have been conducting house to house enquiries in the immediate area and gathering available information. Police logs and radio transmissions are being obtained. The police officers involved and independent witnesses will be interviewed by IPCC investigators. Initial data from the Taser has been downloaded and it is being sent for further testing. A post mortem is due to be carried out later this week. None of the relevant officers were wearing body worn video cameras."
IPCC deputy chair, Rachel Cerfontyne, added: "I would like to assure people that we have begun a full and thorough investigation into police contact with Dalian Atkinson prior to his death, including the level and type of force used. Our investigation team have been securing and preserving relevant evidence, and identifying witnesses. Investigators have met Mr Atkinson's immediate family to explain our role and we have appointed a family liaison manager to keep them updated. My thoughts are with Mr Atkinson's family and friends, and all those affected, at this difficult time."
Neighbour Paula Quinn said the ex-footballer appeared to be "almost staggering" in the street before he was Tasered.
A neighbour, who did not want to be named, said: "I had known him since he was a little boy, he was a famous footballer at one time. He was friendly, he had no trouble that I know of."
Forensic officers were at the scene on Monday as Meadow Close remained cordoned off.
Neighbours took to Facebook to express their shock, with one describing "a lot of shouting and police".
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In a statement the West Mercia force said: "Officers responded to a report for the concern for the safety of an individual at approximately 1.30am this morning at an address in Telford.
"Upon arrival taser was deployed and a 48-year-old man, who subsequently received medical attention, was pronounced dead at approximately 3am.
"West Mercia Police are unable to comment any further as the incident has been referred to the Independent Police Complaints Commission (IPCC) as is normal procedure, and will assist the IPCC with their inquiries."
A West Midlands Ambulance Service spokesman said: "We were called by West Mercia Police to an address in Meadow Close in the Trench area of Telford at about 1.45am this morning.
"An ambulance was dispatched and upon arrival found a man who had been 'Tasered'.
"As he was being conveyed to Princess Royal Hospital, his condition deteriorated and he went into cardiac arrest.
"Despite the efforts of the crew and hospital staff, it was not possible to save him and he was confirmed dead at hospital, shortly after arrival."
Neighbours said the retired star, who drives a Porsche, was well-known among people in the street, making frequent visits to the short cul-de-sac.
Speaking at a cordon set up by police to prevent people entering the street, local residents Matthew and Tina Bothwell said they were deeply shocked at Mr Atkinson's death.
Mr Bothwell, 43, told reporters: "Every time he would come he would have crowds around him. It's close-knit community.
"I just can't bear to think what his family are going through."
Mrs Bothwell added: "He was loving, caring and got on with everybody in the street. He always got on with the kids because they absolutely loved his car."
Local resident Paula Quinn said Mr Atkinson appeared to be "almost staggering" in the street before he was Tasered.
Miss Quinn, who lives in a first-floor flat above a barber's shop, claimed Mr Atkinson went down "like a lead balloon" after being hit by the Taser.
The witness added: "I heard shouting and something smashing, which is what alerted me to look out of the window.
"I am feeling a bit sick knowing that the poor lad has passed. I don't care what anybody has done. Nobody deserves to die as a result of something like that."
Shrewsbury-born Atkinson was a top flight striker in the 1990s, with a goal for league runners-up Aston Villa against Wimbledon, which followed a mazy run from inside his own half, being voted 1992-1993 goal of the season.
He went on to score at Wembley in 1994 as Villa beat Manchester United to lift the League Cup.
Starting his career at Ipswich he played for Sheffield Wednesday and Spanish side Real Sociedad before moving to Villa.
He scored more than 20 Premier League goals for the Birmingham side between 1991 and 1995 before going on to play less successfully for teams including Turkish side Fenerbahce and Manchester City.
He ended his playing career playing in South Korea in 2001.
Reporter Jordan Reynolds is at the scene: