Malaysian police have intercepted human traffickers they say modified a tanker to smuggle undocumented migrants to New Zealand and Australia.

Photo: Royal Malaysia Police

Authorities said the tanker was carrying 131 Sri Lankans when it was intercepted on Tuesday.

There were 98 men, 24 women, four boys and five girls.

Photo: Royal Malaysia Police

The Singapore-based ChannelNewsAsia reports the tanker had the name Etra painted on its side.

Three Indonesians and four Malaysians on a fishing boat used to transport the migrants to the vessel were also arrested.

Malaysia's national police chief Mohamad Fuzi Harun said the large-scale and cunning human smuggling syndicate had been operating for a year and had connections in New Zealand, as well as in Sri Lanka, Australia, Indonesia and Malaysia.

Immigration Minister Ian Lees-Galloway has thanked Malaysian authorities for their work, saying the interception sent a clear message to people smugglers.

Mr Lees-Galloway said lives had been put at extreme risk.

He said the act was not tolerated by New Zealand and the exploitation of the individuals on board was repugnant.