Mahathir Muhammad was speaking at a news conference in Damascus on Monday where he was discussing economic cooperation. He urged resistance against what he saw as attempts by Western states to manipulate Muslims.
"If these countries truly believe in democracy, they should allow the Iraqis to form their own government in whatever way they choose," said Mahathir.
"We (Muslims) should not allow ourselves to be influenced or to be manipulated by Western countries," said Mahathir, whose country will chair the 56-nation Organisation of the Islamic Conference (OIC) for three years.
The 25-member Iraqi council appointed by the US enjoys some executive powers, although Iraq's US occupation administrator retains a veto over its decisions.
Syria has said it will not recognise the US-appointed governing council in Iraq because it is not an independent body.
"We (Muslims) shouldn't allow ourselves to be manipulated by Western countries"
prime minister of Malaysia
A non-permanent member of the United Nations Security Council, Syria abstained when fellow members of the body voted for the creation of the Council.
Syria said then it hoped the creation of the Iraqi council would "pave the way for the creation of a national government that represents the whole spectrum of Iraqi society".
Mahathir said on Sunday that Kula Lumpur will not consider sending troops for any peacekeeping mission in Iraq so long as such a move is not sanctioned by the world body.
"We will have nothing to do with whatever is being done in Iraq, which is not sanctioned or initiated by the United Nations," he said.
The United States had asked NATO member Turkey, also a member of the OIC, to take part in peacekeeping in Iraq after facing mounting casualties. Ankara has yet to give a final answer.