The ban, which took effect from Dec 31, 2007, could further strain relations between the two countries after some Indian politicians sympathised with ethnic Indians who said they have been marginalised by the Malay-majority government.

"The Cabinet decided about two weeks ago to freeze the intake of workers from India and Bangladesh," a Home Ministry official said.

Existing workers from the two countries would not have their work permits renewed, he said, adding that the ban applied to all categories of workers including professionals.

Other Ministry officials confirmed the ban but did not give a reason.

Indians make up about 8 per cent of the two million registered foreign workers in Malaysia. They are mainly employed in the construction, information technology and financial services industries in Malaysia.

Relations between India and Malaysia have been hurt by recent allegations of discrimination by the ethnic community in this Southeast Asian country.

Ethnic Indians held a mass anti-government protest in November, alleging that the authorities have sidelined the community because of an affirmative action policy that favours the majority ethnic Malays.

Some Indian politicians, including Foreign Minister Pranab Mukherjee, expressed concern about the treatment of ethnic Indians in Malaysia.