Malaysia has dismissed an Australian plan to create regional anti-terrorist police squads, saying it will not allow any violation of its sovereignty.
Security is a top election issue
Malaysia's Deputy Prime Minister Najib Razak said his country could deal with terrorist threats and would not allow "pre-emptive strikes" on its soil.
Indonesia and the Philippines also rejected the plan, unveiled by Australian Prime Minister John Howard.
Mr Howard faces a general election next month in which security is a key issue.
Mr Howard proposed creating the special squads as a way of tackling terrorism at its source and preventing it from reaching Australia.
He said the teams could be sent to neighbouring countries, such as Indonesia or the Philippines, with the approval of the governments concerned.
But Mr Najib said Malaysia had not been consulted over the plan.
"We think we have the capability to deal with any threat of terrorism," he was quoted as saying by the official Bernama news agency.
Indonesia's ambassador to Australia, Imron Cotan, reacted to the idea by saying he had been assured two years ago by Foreign Minister Alexander Downer that Australia would not send troops to intervene in other countries in the region.
The Philippines responded that existing treaties would prevent Australia going beyond intelligence-gathering and technical expertise.
Mr Downer later tried to reassure Australia's neighbours, saying the proposal was aimed at potential "failed states" which were unable to police themselves.
"Of course we haven't any intention of sending troops into Indonesia without the approval of Indonesia," Mr Downer told national radio on Tuesday.
"Now in the case of Indonesia, or Malaysia or Singapore or the Philippines, these are countries which are our partners in the war against terrorism."
In his original comments, Mr Howard said six teams of specialist investigators and experts in forensics and explosives would be set up at a cost of A$100m ($70m) if he won the election on 9 October.
Two of the units would be located in south-east Asia, while the others would be based in Canberra and ready to fly out to other countries in the region at short notice.
Mr Howard said the plan would build on his government's "excellent record of co-operation" with its neighbours, especially Indonesia, where Australian police officers have been based since the Bali night-club bombings in 2002, in which nearly 90 Australians were killed.
The bombing of Australia's Jakarta embassy earlier this month has added to Canberra's concerns.
Mr Howard also reiterated a pledge to launch pre-emptive strikes against foreign extremists as a last resort to protect Australia.
"We will not wait for a terrorist threat to eventuate before we take action," he said in a statement.
"In close co-operation with our regional neighbours, we will ensure that we take every measure possible to disrupt and destroy the terrorist networks at their source."
The opposition Labour Party has also outlined a plan to boost maritime surveillance, which includes deploying new fleets of helicopters and boats crewed by armed marshals.
The party's leader Mark Latham rejected the use of pre-emptive strikes, saying Australia needed to do "things in co-operation with our neighbours."