KUALA LUMPUR - MALAYSIAN police told the opposition on Thursday to scrap a weekend rally against a sharp fuel price rise that has stoked anger against the government.

Organisers plan to gather tens of thousands of people in the biggest-ever protest since the government substantially raised petrol and diesel prices in early June.

Police said the rally, to be held just outside Kuala Lumpur, would be deemed as illegal assembly as authorities have not given any permit for the gathering, and warned they would arrest protesters.

'Action can be taken on those taking part,' the police chief for Selangor state adjacent to Kuala Lumpur was quoted as saying by the national Bernama news agency. In Malaysia, a gathering of five or more people requires a police permit.

Protests against the fuel price hikes have so far been small because of the tight restrictions on public gatherings.

Petrol prices were raised by 41 per cent and diesel 63 per cent in line with a global surge in oil prices, a measure that would drive inflation to a 10-year high of 4.2 per cent in 2008. Petrol pump prices in Malaysia are still among the cheapest in Asia.

Army and Police exercises
Sunday's protest comes as the police and the military are holding their inaugural exercise in the city to prepare for any security threats, a move an opposition party described as 'shocking' and 'alarming'.

The six-day drill, which ends on July 7, is being held in the wake of a series of street demonstrations held in the capital over the past year, police chief Musa Hassan was quoted by the New Straits Times as saying.

Mr Musa told reporters the army would be deployed to quell street protests only if absolutely necessary and once an emergency had been declared.

The opposition Democratic Action Party said the involvement of the military in police efforts to handle street protests would send a wrong signal to Malaysians and the world.

'This latest move by the armed forces and the police will open a Pandora's box, triggering a number of concerns that could send the country down a slippery slope,' Mr Liew Chin Tong, a DAP lawmaker, said in a statement.

Malaysia has been rocked by a series of anti-government protests since last year.

Last November, more than 10,000 ethnic Indians marched in the capital to complain about racial discrimination. Police used tear gas, water cannons and batons to break it up.

Malaysia's defence chief Abdul Aziz Zainal defended the need to organise police-military drills. 'Without such exercises, there will be no coordination when a real threat arises.' -- REUTERS