Malaysia played down strains in relations with Singapore today as Foreign Minister Syed Hamid Albar described talks with visiting Deputy Prime Minister Lee Hsien Loong as "very positive and constructive".

"We may have differences. It will be there but will not stop us from having good bilateral and mutually beneficial relations with Singapore," he told reporters after meeting Lee, who is on the second day of a four-day visit to Malaysia.

"Let us not open new fronts for us to agree and disagree," he said.

In their hour-long discussions, Syed Hamid said Lee reiterated Singapore's stand that land reclamation works in the Tebrau Straits between the two countries were being carried out in accordance with the law.

"We are as much interested in the law. We know the boundary and how to calculate the boundary," he said, adding that Malaysia's concerns were more towards the economic impact of the reclamation works.

Rival port

"We also let them know our concerns. I think we are very happy that they understand our position.

"I think Singapore is interested to know if it does affect us. Our concerns, we will do it properly, legally and according to diplomatic process. We will put forward to them to look at it," he said.

Malaysia fears the project is too close to its border and could obstruct ships headed for ports in its southern state of Johor, which are being promoted to rival Singapore's port.

The row has put a fresh strain on often prickly relations between Malaysia and its tiny but prosperous neighbour.

Other issues that have strained ties include water supplies from Malaysia to the resource-poor island state, a proposed bridge linking the countries and the use of Malaysian airspace by Singaporean aircraft.

Lee, who is accompanied by a 12-member entourage including three members of parliament, is scheduled to return to Singapore on Thursday.