DAP has claimed that the proposed anti-fake news bill will cover up all corruption scandals such as 1MDB.
DAP secretary-general Lim Guan Eng criticised the bill as "a death knell" to freedom of speech and press freedom.
He said the bill uses imprisonment to threaten independent media outlets, which do not publish news verified by the BN federal government.
"In other words, only the government can determine which is true or false or decide which is fake or not.
"That only the BN federal government can decide what is true or false is draconian," Lim, who is Penang chief minister, said in a statement today.
"This is a clear and unequivocal signal that Malaysia under BN is now lurching into a full-blown dictatorship."
Lim was responding to Deputy Communications and Multimedia Minister Jailani Johari, who said that any 1MDB-related information which was unverified would be considered fake news.
According to him, Jailani (photo) had "arrogantly" said that the general definition of fake news is news confirmed as false by authorities with expertise in the matter.
Minister in the Prime Minister's Department Azalina Othman Said had also talked about protecting the public from becoming victims of fake news.
"What about whistleblowers and independent media outlets that fall victim to BN because they fall foul of the anti-fake news bill?" Lim asked.
"Even issuing this statement can land me in trouble with the anti-fake news bill, since BN appears to want to get me for something as minor as singing and dancing, along with a song mocking the goods and services tax (GST) in an event attended by children," he added.
Lim said many countries have commenced investigations into matters related to 1MDB, which has been described by US attorney-general Jeff Sessions as "kleptocracy at its worst".
In Singapore a bank had its licence cancelled, its officers charged and there has even been a former banker jailed for four-and-a-half years (54 months) for being involved in misappropriation of 1MDB funds, he noted.
"And yet the BN federal government can dismiss all these news as fake!"
Lim asked if the two recent events involving 1MDB are considered fake news as well.
One is the Malaysian government's refusal to file its claim of ownership of the RM1 billion superyacht Equanimity, belonging to Penang-born Low Taek Jho or Jho Low, which was seized in Bali.
Despite news of the seizure hitting global headlines, Malaysian ambassador to Indonesia Zahrain Mohamed Hashim, in an interview with Indonesian magazine Tempo, claimed that there was "no case" against 1MDB.
The other event, Lim said, was the government's refusal to claim Swiss francs CHF104 million (RM430 million), seized by the Swiss government due to being allegedly misappropriated 1MDB funds.
The embattled 1MDB defended itself by saying that it would not claim ownership of the money seized by Swiss authorities, as it does not belong to it.
"Under the proposed anti-fake news bill, the RM1 billion superyacht and RM430 million are also fake?" Lim asked.