A war of words between Malaysia and Australia warmed up with Prime Minister Dr Mahathir Mohamad responding sarcastically to jibes by a leading Australian politician.

Mahathir, told to take a "running jump" over his remark that Australia could not be accepted as an Asian country if it played "deputy sheriff" to the United States, suggested the Australians were arrogant and should pipe down, the official Bernama news agency reported.

"We say less things about Australia than Australians say about us, calling me a dictator, authoritarian government.

"I am the first authoritarian government elected to become a dictator and then resigning as a dictator. So this is the first dictator in the world who has resigned while still quite healthy," Mahathir told reporters on his arrival home from a trip to Europe yesterday.

The row began when Mahathir, who has announced his intention to step down in October next year, told an Australian newspaper in an interview that Australia had gone too far in identifying with US aims and tactics in the war against terrorism.