SYDNEY - A war of words between Australia and Malaysia deepened Sunday as Prime Minister John Howard retaliated to a verbal outburst from his Malaysian counterpart Mahathir Mohamad and Malaysia's foreign minister accused Canberra of double standards.

Howard dropped his normal policy of not responding to Mahathir's remarks after the Malaysian leader said Australia would be treated like a terrorist state if it attempted to act as a regional sheriff for the United States.

"That's just so over the top," Howard told journalists in Bangkok, where he is attending an Asia-Pacific Economic Cooperation (APEC) meeting.

Happy retirement

Howard noted that Mahathir was stepping down at the end of the month, saying "we wish him a long and happy retirement".

He refused to comment further on Mahathir's remark last week that Jews "rule the world by proxy", which he has previously condemned as repugnant and offensive.

Mahathir has a long history of baiting Australia, calling it as "some sort of transplant from another region" last month.

He was further angered by US President George W Bush's description last week of Australia as a "sheriff" in the region, saying if Canberra attempted to take on the role it would be treated as a terrorist.

Howard has argued Bush's remark was misinterpreted and the US leader simply meant he saw Australia as an equal partner, rather than some sort of "deputy sheriff".

Meanwhile, Malaysian Foreign Minister Syed Hamid Albar said Canberra and Western countries had over-reacted and displayed double standards by labelling Mahathir's comments about Jews as anti-Semitic.

Don't get emotional

He said Muslims were constantly criticised but criticism of Jews was apparently not allowed.

"Don't get emotional, over-reacting to something and trying to create a storm when there is no storm at all," Syed Hamid told Channel Nine .

"You cannot deny the fact that the Jewish economic power is tremendous, their lobby is tremendous, so what's wrong with saying that?

"You are not saying kill all the Jews, you say take the example of the Jews." - AFP