|Razak, centre, made the announcement in an address marking the country's independence [EPA]
Najib Razak, the Malaysian prime minister, has abolished two controversial security laws and lifted licensing curbs on the media.
The government will abolish the Internal Security Act (ISA) and the Emergency Ordinance, a relic of British colonial rule which allow indefinite detention without trial, and replace them with new anti-terrorism laws that ensure protection of suspects' fundamental rights, Najib said in a televised address on Thursday.
"It is time for Malaysians to move forward with new hope," he said.
"Let there be no doubt that the Malaysia we are creating is a Malaysia which has a functional and inclusive democracy."
Police laws would also be amended to allow freedom of assembly according to international norms and the government will give more freedom to media groups by scrapping the need for annual printing and publishing licenses, he said.
Calls for reforms
Najib's speech marked Friday's anniversary of the 1963 union of peninsula Malaysia with Sabah and Sarawak states on Borneo Island - six years after the country's independence from British rule.
It comes two months after more than 20,000 people demonstrated in Kuala Lumpur, the Malaysian capital, for electoral reforms.
At the time, police fired tear gas and water cannons and arrested more than 1,400 people for taking part in what they said was illegal activity.
Thursday's policy changes are Najib's boldest since he took office in April 2009 and are seen as a move to bolster support for his ruling coalition ahead of general elections.
"There may be short-term pain for me politically, but in the long-term the changes I am announcing tonight will ensure a brighter, more prosperous future for all Malaysians,'' Najib said.
National Front, Najib's political coalition, has been working to regain public support after suffering its worst performance in 2008 polls.
The opposition alliance wrested more than one-third of seats in parliament amid public allegations of government corruption and racial discrimination.
The elections are not due until 2013 but are widely expected next year.
Amnesty International, the UK-based rights monitor, described Najib's announcement as a "significant step forward".
"The ISA is a notoriously repressive piece of legislation that has stifled peaceful dissent in the country for over 50 years," Sam Zarifi, the group's Asia-Pacific director, said in a statement.
"The thousands of people still detained under these preventive detention laws must be either charged with a recognisably criminal offence, or be released immediately."
Najib proposed two new laws to preserve peace and public order and combat terrorism.
"Any new legislation must comply with international human rights standards," Zarifi said.