Malaysia has sent back all Thai Muslims who were sheltering in the country, resolving a thorny bilateral issue, the country's de facto law minister and its attorney-general said today.

"They have all been sent back already. It's no more an issue. Thailand is very happy, we are happy," minister Mohamad Radzi Sheikh Ahmad told reporters.

The group of 131 Thai Muslims had fled across the border from their homes in restive southern Thailand on Aug 30, citing insecurity and fear of persecution by the Thai government.

Their flight triggered a diplomatic row between Thailand and mainly Muslim Malaysia, which insisted that the group should not be forced to return, particularly if their safety could not be assured.

But Malaysia's attorney-general Abdul Gani Patail told reporters both countries were now "very happy about the matter". He did not explain why Malaysia had decided to send back the group.

"It is all settled. It was indicated to me that (they were sent back) late last year," he said, after officiating over a meeting of Southeast Asian government lawyers on mutual assistance on criminal matters.

Emergency rule extended

News of their departure had been conveyed by "certain authorities here", he said, without elaborating.

At the height of the row in October, Thailand's foreign minister declared he had stopped speaking with Malaysia.

Relations were on the mend after Malaysia in December extradited one of the 131, a Thai man wanted for his links to a Muslim insurgency.

Security analysts have warned that the situation in southern Thailand, where about 1,000 people have died in the unrest since January 2004, could spread and destabilise Southeast Asia if not managed properly.

Thailand on Tuesday extended emergency rule first enacted in July in the south by another three months, citing continued violence.