Malaysia rejected Thursday comments by the United States backing the right to hold peaceful protests, after authorities used tear gas and water cannons on rare mass rallies here.

Prime Minister Abdullah Ahmad Badawi has also warned he could use a draconian internal security law against protesters, drawing criticism from human rights groups and opposition parties.

The government has been badly rattled by two mass demonstrations in the streets of the capital Kuala Lumpur this month, one calling for electoral reform and the other by ethnic Indians to highlight alleged discrimination.

The US State Department on Wednesday implicitly criticised the crackdown, which has included the arrest of hundreds of protesters, some of whom witnesses said were beaten by police armed with batons.

"We believe citizens of any country should be allowed to peacefully assemble and express their views," a US State Department official said when commenting on the Malaysian crackdown.

Cabinet minister Nazri Aziz defended the government's response to the rallies, which went ahead despite police bans.

"What is good for their country is not necessarily suitable for our country. We are a sovereign nation," said Nazri, the nation's de facto law minister.

The prime minister on Tuesday warned he could use the controversial Internal Security Act (ISA) to quell the rallies.

"The ISA is a preventive measure to spare the nation from untoward incidents that can harm the prevailing peace and harmony and create all sorts of adverse things," Abdullah said.

"So, I don't know (when to invoke the ISA), but ISA will be there. When it is appropriate to use it, it will be used," he said according to the state Bernama news agency.