(AFP) Umno today debated ways to reverse its declining fortunes after a stern warning from Prime Minister Dr Mahathir Mohamad to shape up or risk losing the next election.

Delegates from the 2.9-million-member UMNO, which has held power since 1957, were chewing over Mahathir's outspoken speech yesterday to their annual meeting.

Mahathir, who marks 20 years in power next month, castigated fellow Malays for laziness, greed, ingratitude towards UMNO and squandering opportunies under an affirmative action programme.

He also accused unspecified foreign powers and their media of hating Malaysia and of supporting the opposition to topple his government.

UMNO lost 22 parliamentary seats in the 1999 polls as many Malays abandoned it -- partly due to anger over the sacking and jailing of the premier's popular former deputy Anwar Ibrahim.

Mahathir was today unrepentant about his speech, which one delegate has termed the toughest attack on Malays for 20 years.

"There are some people who do not like to be told the truth. They will be unhappy but I suspect that a lot of people will heed the warning," he told a press conference.

Not time to quit

Asked about a possible electoral backlash, he said: "It's too bad if they don't want to vote for me. What can I do? Some people want to live on cloud nine."

As always, the meeting is being keenly watched for any sign of when the Mahathir era will end.

The past two decades have seen dramatic economic growth -- at the expense, critics say, of human rights and the independence of institutions like the judiciary.

Mahathir, aged 75 and one of the world's longest-serving leaders, has indicated he is in no hurry to step down.

Yesterday he said he would have to find the right time to quit given the fact he still has support and today he reiterated that he expects Deputy Premier Abdullah Ahmad Badawi to succeed him.

"At the moment our succession is based on the number two man and if I am not around, the number two man who is Abdullah will take over..." he told the press conference.

No to lecture

Several delegates backed Mahathir's speech yesterday in which he recalled UMNO's historical struggle and exhorted the young to learn from it.

"Young Malays must understand UMNO's struggle. They should be thankful to UMNO ... Malays must be united with UMNO or else the future generation will live in darkness," Badaruddin Amirudin told fellow delegates.

"If there is no Malay unity, UMNO will not succeed in its struggles," said Abdul Rashid Ngah.

However, a leading member of the party's youth wing took issue with demands by Mahathir for gratitude and for his emphasis on the past.

"The younger generation of Malays are more exposed, highly educated, more critical and their expectations of us as politicans, as UMNO leaders, have changed," Zulkifli Alwi, youth wing secretary, told AFP .

If some leaders still believed they could lecture the Malays, especially the younger generation, "then I am afraid our prospects in the upcoming elections will remain bleak or at best mixed".

Zulkifli added: "We cannot tell the younger generation of Malays to be thankful to the party any more."

One diplomat said Mahathir's speech looked backward rather forward and another envoy said his message could alienate uncommitted voters.