The Malaysian Government says it plans to round up and deport around 30,000 illlegal immigrants from the northern state of Sabah.
Most of the immigrants are from neighbouring Indonesia or the Philippines.
Earlier this week, the government imposed a ban on bringing in new workers from Indonesia following clashes between Indonesians and the police at a Malaysian textile factory.
Malaysia is home to an estimated 750,000 foreign workers, with perhaps as many more illegal immigrants.
With its small population and relatively prosperous economy, Malaysia has long been a magnet for people from its poorer neighbours.
Now the government wants to close the door.
The decision to halt all new recruitment from Indonesia, and to expel illegal aliens appears to have been prompted by recent violent incidents involving Indonesian workers.
However, the government has been talking for several months about the need to tighten up immigration regulations.
At one point, it even threatened to have illegal aliens caned.
Poor will get poorer
It cites the need to protect employment for Malaysians during the current economic downturn, although most immigrants do menial jobs unwanted by local people.
A more compelling reason is the belief that immigrants are responsible for a great deal of crime. Indonesians are coming in for particular scrutiny now after Islamic militants from that country were accused of running a terrorist network operating in both Singapore and Malaysia.
If the Malaysian authorities go ahead with their threat, it will have a devastating impact on some of the poorest parts of Indonesia and the Philippines - some of which rely heavily on remittances sent home from workers in Malaysia.