Foreign Minister Syed Hamid Albar said Malaysia was being unfairly targeted because it was a Muslim country and lumped together with states such as Iran, Libya and North Korea.

"What he (Bush) said was very misleading. We will write to the embassy soon to communicate our displeasure and our unhappiness," he said.

Malaysian opposition parties meanwhile challenged the government to present to parliament a clear and complete report on the allegations, which focus on a company owned by Prime Minister Abdullah Ahmad Badawi's son Kamaluddin.

The Democratic Action Party and the National Justice Party (Keadilan) of jailed former deputy prime minister Anwar Ibrahim said if the allegations were completely untrue Malaysia should demand an apology from Washington.

The charge is simple: Malaysian company Scomi Precision Engineeringmanufactured centrifuge parts for Libya's nuclear weapons uranium-enrichment programme.

The company's reply is also simple: It admits making parts found on a ship heading for Libya, but says it did not know their final destination and believed they were for the oil and gas industries.

Syed Hamid said in a statement: "We regret that an ordinary business contract entered into by SCOPE has been distorted, exaggerated and blown out of proportion.

"We take exception that Malaysia has been deliberately singled out in the speech when President Bush had also clearly stated that other necessary parts were purchased through network operatives based in Europe, the Middle East and Africa.

"Yet he failed to name those countries hosting them."

Malaysia had always supported international efforts to prevent the illegal transfer of nuclear technology or the illegal production of materials which could be abused for the clandestine development of weapons of mass destruction, he said.

The US seemed to have forgotten the cooperation extended by Kuala Lumpur in many areas, including in the fight against terrorism, Syed Hamid said.

Bush also said in his speech at the National Defense University in Washington last Wednesday that a key figure in the black market operation, a Sri Lankan businessman named B.S.A. Tahir, was "in Malaysia".

Bush named Tahir as "deputy" to Pakistan's disgraced scientist Abdul Qadeer Khan, who has admitted selling nuclear secrets.

Tahir used a computer company in Dubai as a front for Khan's proliferation activities, Bush said, calling him the network's "chief financial officer and money launderer (and) its shipping agent".

Prime Minister Abdullah said last Thursday that Tahir had indeed placed the order for the parts with SCOPE and had been questioned by Malaysian police.

He had not been arrested, Abdullah said, without indicating whether the businessman was still in Malaysia.

"He was not held or detained by the police but police did meet up with him and asked him a lot of questions."

A top security official told AFP Sunday that the whereabouts of Tahir, who is believed to be married to a Malaysian, were unknown, but would not answer any further questions.

WAR.WIRE