Australia will arrest anybody who "looks like Saddam Hussein," Prime Minister Dr Mahathir Mohamad said today after two Malaysians were refused entry at Sydney airport, allegedly on suspicion of being Muslim terrorists.

"I expected this to happen because they see anybody who is a little bit coloured and has a moustache looks like (Iraqi President) Saddam Hussein, they will arrest. That's their way," Mahathir told reporters.

His remarks were the latest in a series of broadsides aimed at Australia, including a suggestion that Prime Minister John Howard saw himself as "a white man sheriff in some black country."

Mahatir was then responding to Howard's threat to launch pre-emptive strikes against foreign-based terrorists who posed a threat to Australian interests.

Local media today gave extensive coverage to the case of two ethnic-Indian Malaysians who said they were interrogated for five hours on arrival at Sydney airport last week before being deported and barred from entering Australia for three years.

Not genuine visitors

Crane operator Murugan Ramasamy, 29, and factory worker Rajendra Prasad Arul, 23, lodged a police report on their return to Kuala Lumpur, saying they wanted authorities to help them get their visas back and ensure they would be allowed future entry to Australia.

The two men said they had wanted to spend the first week of the New Year in Sydney visiting a friend and seeing sights, but were told that Malaysia was "causing many problems as it is a terrorist state."

Immigration officials then cancelled their visas on the grounds that they were not genuine visitors as they had no itinerary and no hotel bookings, The Star newspaper reported. AFP