After an acrimonious relationship with Canberra under Dr Mahathir Mohamad, Prime Minister Abdullah Ahmad patches things up with Malaysia's new mate in the Asia Pacific region.

' Australia is our mate: Malaysian PM ' read the heading for a front-page story in an Australian daily which said Abdullah has opened a new era in relations between the two countries.

By publicly declaring Australia a 'friend' of Malaysia and Asean, The Australian newspaper said the premier displayed the "first significant sign of a formal breakthrough in the often adversarial relationship".

In an interview with the newspaper's Southeast Asia correspondent Kimina Lyall, Abdullah said the Malaysia-Australia relationship had " political difficulties " but these could be overcome.

"I will put it this way: the fundamentals of the relationship are still very strong. We only have the problem sometimes at the political level, that's all," he said in the interview (the first with an Australian journalist since taking office last year) after speaking at a dinner of Australian and Asian leaders of business and government in Kuala Lumpur.

Asked if he still thought Australia and Malaysia had political differences, he said: "Perhaps, perhaps not, lately".

Referring to Australian Prime Minister John Howard's threat last year to take "pre-emptive strikes" in Asia to thwart a terrorist attack, Abdullah said such comments did not "go down well" in the region.

However, he added: "Australia is our friend, of course!"

Closer ties with Asean

A Bernama report on the interview said Abdullah's comments came as Asean officials revealed that a proposal to forge ahead with a free trade agreement between the region, Australia and New Zealand was a "done deal".

The officials told The Australian that the idea, first accepted for consideration by Asean in June, had received such warm support in the region that the grouping was even considering broadening it to include an Asean-China Free Trade Agreement (FTA) under negotiation.

Although the mechanisms of such a move are yet to be discussed, including how it may complement the bilateral agreement Australia hopes to forge with China, the proposal is a further positive sign of Australia's deeper integration into the region.

The newspaper said much of the improved relationship had come with the departure of Mahathir from the Asean sphere, "as he was a strong opponent of closer ties with Canberra".

It said in off-the-cuff pre-dinner remarks on Tuesday to a group of leaders who had spent three days in Malaysia engaging in "conversations" about Australia-Asian relations, Abdullah used the word "friend" seven times in as many minutes.

Abdullah, who has not met Howard since he succeeded Mahathir, has accepted an invitation to visit Australia in what will be the first full official visit by a Malaysian leader since 1984.

Howard had once branded Mahathir a 'recalcitrant' leader while the latter ruffled feathers when he described Australia as America's ' deputy sheriff '.