Former premier Dr Mahathir Mohamad warned today that the new government's economic performance has undermined support for the ruling party and could hurt its chances at the next elections.

His latest attack showed he has no intention of dropping his campaign against the administration, despite landmark talks yesterday with Prime Minister Abdullah Ahmad Badawi which had raised hopes of an end to the damaging feud.

"I will continue until there is some change, until I achieve some results," Mahathir said of his stream of criticism against Abdullah, which includes charges of corruption, nepotism and incompetence.

"What I am trying to do is to save Umno from bad leadership. I will continue until there is some change.

"In the course of time, the deputy prime minister should succeed the prime minister,'' he said, hinting for the first time that Deputy Prime Minister Najib Abdul Razak should take over the leadership.

He said this at a press conference in his residence in Seri Kembangan, near Kuala Lumpur this morning.

The press conference was called after most of the media missed an earlier one called last night following the reconciliation meeting between the two leaders.

Despite saying that he was satisfied with the meeting , Mahathir today indicated that he was not about to lie low.

Abdullah's mismanagement

The 82-year-old firebrand, who publicly regrets handing Abdullah the top job in 2003, cast doubt on whether the prime minister should bid for a second term.

"It depends on how he performs," he said. "I was there to tell him what I'm not happy with. I was not going to suggest what he should do. But it is up to him to decide what to do."

There was no immediate comment from Abdullah after the meeting.

Mahathir dismissed allegations that his attacks are harming the ruling Umno which has ruled for the past four decades, saying that Abdullah's mismanagement was responsible for the damage.

"It's not just about divisions within Umno, it's public support for Umno which is being eroded," he said.

"For the past three years, there has been no move, the economy has not been doing well. People have not been able to get jobs, and unemployment is still high. Nothing has been done really to improve the economy."

Mahathir added that crime has risen, businesses are not investing enough and economic growth is too low.

"Umno cannot win elections without public support and today the public is very critical of the present conditions of the present economy, the present system of administration, the involvement of his family members."

Interfering nosey-parker

Mahathir said that the opposition had no chance of winning at the next elections, due to be held by 2009, but that they might be able to reduce the government's majority.

"I see what he is doing now, which is bad for the party, and unless you criticise and stop what he is doing now, you are going to have bad results for this country," he said.

During their two-hour talks yesterday, Mahathir said Abdullah cited a survey that found the popularity of both men had been damaged by the row which has raged for most of this year.

"I told him that I don't care if I am popular or unpopular. But if anybody does anything that is damaging to the country and to the Malays in particular, I am going to come out and criticise," he said.

"Of course, I'm 82 years old. People believe that if they delay long enough this interfering nosey-parker will disappear and will not be able to speak."

Mahathir's campaign was triggered by the axing of projects conceived during his two decades in power, including an abandoned proposal to build a new bridge to Singapore.

He was very good deputy but...

The elder statesman said Abdullah had also addressed charges that his son had gained improperly from government contracts, and allegations he and his relatives had benefited from Iraq's oil-for-food programme .

A United Nations inquiry last year cleared Abdullah, who was deputy premier during the programme, but implicated two of his relatives in the 2004 scandal.

Mahathir said he remained unconvinced by the prime minister's explanations.

Besides the flagging economy, Malaysia had also lost its standing in the world, he said, fingering Abdullah's friendlier approach to the United States.

"Foreign policy-wise now we are less highly regarded as before, especially by the developing countries and the Muslim countries," he said.

"This wanting to be friendly with Mr Bush is something other people are commenting (on) and I can't understand," said Mahathir, who while in power often railed at US foreign policy.

Mahathir said his legacy was being "chipped away by the actions of the government" and that Abdullah had changed since the days when he served as his faithful deputy.

"He was a very good deputy but people change when they have power," he said. "I made a lot of mistakes, I choose people and they turn against me."

Yesterday's press conference: Mahathir says attacks on gov't will not stop