Malaysia has bought the rights from a Japanese firm to the world's smallest microchip that can be embedded in everything from currencies to human bodies and will boost the global anti-terror war, said Prime Minister Dr Mahathir Mohamad.

Mahathir said the revolutionary miniature chip, developed by Japan's FEC Inc, could be combined with current technology to "greatly prevent the possibilities of terrorist acts" as well as banknote and document counterfeiting.

"With the need for greater security at airports and other transport terminals the current security level provided by available systems is insufficient," Mahathir said.