Prime Minister Abdullah Ahmad Badawi yesterday rejected US President George W Bush's description of Iran as the leading state sponsor of terrorism and said the comment would cause discord.

"Surely this remark will not be well received by Islamic countries and will give rise to polemics among them," he was quoted as saying by the official Bernama news agency.

"We Malaysians too disagree with the remark," he said during an official visit to Spain.

Malaysia - a moderate Muslim country with a multi-ethnic population - currently chairs the 57-nation Organisation of the Islamic Conference (OIC), the world's largest grouping of Muslim states.

Bush stepped up his war of words with Iran on Sunday in the keynote speech of his tour of the Middle East and the Gulf.

"Iran is today the world's leading state sponsor of terror," he said in Abu Dhabi, the capital of the United Arab Emirates, adding that Tehran's "actions threaten the security of nations everywhere".