Malaysia's prime minister has announced plans to repeal a colonial-era law that has been used over the years to crack down on dissent and the opposition.

Najib Razak announced the move late on Wednesday amid growing public demand for public and social reforms ahead of an election due by early next year.

"The Sedition Act represents a bygone era in our country and with today's announcement we mark another step forward in Malaysia's development," Najib said in a speech on Wednesday night.

The law would be replaced by a new National Harmony Act, which Najib said would "balance the right of freedom of expression as enshrined in the Constitution, while at the same time ensuring that all races and religions are protected".

Najib has rolled back several colonial-era security laws since last year, hailing it as the biggest shake-up of the Malaysian political system since independence from Britain.

A draconian security law allowing detention without trial was scrapped earlier this year and eased public assembly rules, although critics said the reforms were a sham as the laws were replaced with legislation that is just as repressive.

Opposition leaders claim the reforms are a ploy to gain public support ahead of next year's elections.

'Rights perspective'

Phil Robertson, Asia deputy director for Human Rights Watch, said the reforms should not be cosmetic.

"The government should realise that change for change's sake is not enough," he said. "The replacement legislation has been as bad or worse from a rights perspective."

Lim Guan Eng, chief minister of opposition-ruled Penang state, said the sedition law had long been used as a convenient political tool to silence opposition voices.

Lim himself was jailed for 18 months under the law in 1998 for allegedly making seditious remarks in his defence of a rape victim.

Lim urged Najib to withdraw current sedition charges against opposition leaders to prove his move is genuine.

Najib's coalition has led Malaysia since independence in 1957 but suffered its worst electoral performance ever in 2008. It now has slightly less than a two-thirds majority in parliament and is working hard to claw back support.

Anwar Ibrahim, the opposition leader, has said he is confident his three-party alliance can win a comfortable majority in upcoming polls amid widespread public unhappiness over the government's handling of corruption and racial
discrimination.