Malaysia's transgender population faces systematic repression, harassment and mistreatment, and the government must immediately repeal laws that criminalise their lifestyles, Human Rights Watch has said.

On Thursday, the US-based group released a report it says details worsening abuses that transgender people face in the Southeast Asian nation.

They include arrest, assault and extortion by authorities, public shaming of transgender people by forcing them to strip off their women's clothing in public, and barriers to healthcare, employment and education.

Simply for being transgender you can be arrested. That is not something we see in the rest of the world Boris Dittrich, HRW

Boris Dittrich, the group's lesbian, gay, bisexual and transgender (LGBT) rights advocacy director, said the situation was worsening due to the steady rise of conservative Islamic attitudes in Malaysia.

"Simply for being transgender you can be arrested. That is not something we see in the rest of the world," he said.

"It fits into this picture of Islamisation of the country."

Malaysia has civil courts based on British law, but also sharia courts regulating adherence to Islamic practices, and which apply only to Muslims.

Islamic law outlaws men dressing as women, which is punishable by up to three years in jail. Some Malaysian states also outlaw cross-dressing by women.

Homosexuality effectively outlawed

Human Rights Watch said many Malaysians who were born as men but who identify as women recounted physical and sexual assault at the hands of authorities.

The group said it interviewed dozens of such people for the 73-page report.

One, identified as Victoria, claimed to have been stripped naked and molested by officials.

"I was completely humiliated," Victoria said. "Everyone was looking... They took photos of my naked body."

Three transgender plaintiffs have filed a suit seeking repeal of the anti-cross-dressing law in one Malaysian state, calling it discriminatory and unconstitutional.

In a statement, Dittrich said transgender people "risk arrest every day" and that authorities faced no accountability in their treatment of them.

Homosexuality is effectively outlawed, with gay sex punishable by up to 20 years in prison.