TWO Malaysian states are considering passing laws that could punish gay Muslims and gay rights supporters with prison sentences, a regional minister said today.

"Homosexuality is against Islam. Men should look for women, not men. So that's why we don't want to follow this activity promoted by Western countries," Mohamad Ali Rustam, chief minister of southern Malacca state said.

The politician is a member of Prime Minister Najib Razak's ruling United Malays National Organisation party, which had announced plans in September to expand civil liberties and break with the country's authoritarian past.

"People are talking about human rights, but this is not right ... It's our duty (to stop it) but we cannot take action because there is no law," Mohamad Ali Rustam said.

Homosexuality remains a taboo subject in Muslim-majority Malaysia, where sodomy is punishable by up to 20 years in prison, and the mooted new proposition comes shortly after police banned an annual gay rights festival.

State Islamic authorities were considering drafting a new law that could charge in Islamic courts those who engaged in "homosexual activities" and "free sex activities", the minister said, without elaborating further.

The sentence could range from counselling, to a fine or a jail term.

Any law would have to be approved by the state assembly, but the minister said this could happen within months.

Eastern Pahang state has also reportedly proposed a similar law, where the state's top Islamic scholar Abdul Rahman Osman was quoted by The Star daily as saying such a law was necessary to stop "deviant sexual orientation".

Muslims, who make up 60 per cent of Malaysia's 28 million people, are subject to both criminal laws and Islamic laws for civil matters.

Malaysia made headlines earlier this month when police said they would prevent an annual gay rights festival. The organisers decided to call off the event for the safety of their participants.

New York-based Human Rights Watch has urged Malaysia in a letter to the prime minister - who is expected to call fresh polls within months - to rescind the ban and protect all Malaysians from discrimination.