By Jonathan Kent
BBC correspondent in Kuala Lumpur
The row over a recent speech by Malaysia's prime minister in which he alleged that the world is controlled by Jews has escalated.
Mahathir accused the West of being biased against Muslims
Dr Mahathir Mohamad has accused US President George W Bush of lying when he told reporters that he had rebuked the Malaysian leader for his remarks.
Meanwhile, Dr Mahathir has said a call by some Jewish groups for a boycott of Malaysia amounts to blackmail.
With just six days until he retires, the prime minister is speaking without any apparent regard for the consequences.
Ten days ago Dr Mahathir told dozens of Muslim leaders gathered in Malaysia that they should learn from the example of the Jews.
Despite the Nazi holocaust they now ruled the world by proxy, Dr Mahathir claimed, inventing democracy, socialism and human rights to further their own ends.
Days later Dr Mahathir and President Bush met at a summit in Bangkok.
The Malaysian leader rejected the US State Department's account of their exchange - that George Bush told Dr Mahathir his remarks were divisive and wrong.
But the president stood by the account and Dr Mahathir has hit back.
"It was the biggest lie. If he'd rebuked me I'm quite sure I would have rebuked him also," Dr Mahathir said.
"If you can tell a lie about the existence of weapons of mass destruction and go to war because of it I'm not
surprised if he is prepared to lie about what he said to me."
Rather, the Malaysian leader insists, the president had apologised for speaking out against him, after which they were "walking practically hand in hand," Dr Mahathir said.
Meanwhile, the veteran prime minister has called on Malaysians to stand up against what he termed blackmail by those Jewish groups who have called for a boycott of foreign investment in the country.
"I don't think we should allow ourselves to be blackmailed by them...The press belongs to the Jews and their power is so great that people are afraid to criticize them," he was
quoted as saying.
"On the other hand, you can accuse Muslims of being terrorists ... and Europe does not protest," he added.