KUALA LUMPUR - MALAYSIA'S ruling party signaled on Friday that the increasingly unpopular prime minister may step down by March, but pledged to allow him a 'dignified' exit from politics.

Prime Minister Abdullah Ahmad Badawi said after chairing an emergency meeting of the United Malays National Organisation that he will announce within two weeks whether he will defend his post as the party's chief in March party elections.

Every prime minister since Malaysia's independence in 1957 has been the Umno president.

Mr Abdullah said the party's policy-making body decided on Friday to postpone the elections to choose its leaders by three months to March to 'facilitate early transition' of power.

He refused to confirm if this meant he would not contest the elections, saying he would reveal his decision before Oct 9, when the party's district officials start meeting to nominate candidates for the ballot.

'It will be my decision whether to contest or not. You can go on guessing but the decision will be mine,' Mr Abdullah told a news conference.

Mr Abdullah has been facing calls to step down to take responsibility for leading the Umno-dominated National Front ruling coalition to disastrous results in general elections last March.

The prime minister previously promised to hand over power to his deputy, Najib Razak, in 2010 instead of 2013 when his term ends. But party dissidents said that was too long and demanded that he retire before the ruling party's next elections.

'We have taken cognisance of the views of the party members,' Mr Najib said Friday.

By postponing the elections, Umno's top leaders appear to have struck a compromise that would allow the 68-year-old Abdullah to exit gracefully.

Trade Minister Muhyiddin Yassin, who has urged Abdullah to consider retiring earlier, said Friday's decision might indicate that March 'is the new deadline' for Mr Abdullah to hand over power.

'We want to ensure that the power transition process does not affect (Abdullah's) honor. It must be done in a dignified manner,' Mr Muhyiddin told reporters. 'This would be the best time for us to close ranks, to be more united ... in terms of bringing back confidence in UMNO.'

Mr Abdullah has said he wants to quit only after completing his program of reforms of the economy, judiciary and administration - goals that have made little progress in the five years he has been in office.

The urgency to boot out Mr Abdullah is also partly due to concerns that he may be incapable of dealing with opposition leader Anwar Ibrahim, who is threatening to engineer enough defections from the ruling party to bring down the government.

Anwar's People's Alliance coalition won an unprecedented 82 seats in the 222-member Parliament in March and took control of five of Malaysia's 13 states. Abdullah's National Front coalition now has only a 28-seat majority in Parliament. -- AP