'Now we are seeing the different races making demands on the government, which they perceive as a weak government,' he told reporters in Tokyo, where he spoke at the annual conference organised by Nikkei newspaper.
He said 'extremists' among different communities had begun to voice their opposition and make unfair demands on the government, trying to 'divide rather than unite'.
He added: 'Because of this weakness (of the government), there is a tendency for centrifugal forces to draw away from each other.
'The answer to this is for the Prime Minister to step down. He has not acknowledged that he has failed the party.' The former premier has campaigned actively for the resignation of Datuk Seri Abdullah in the last two years.
Tun Dr Mahathir, who was named in an inquiry into allegations of judge-appointment fixing, said the probe was a political ploy to 'fix' him as he squabbles with Mr Abdullah.
A royal commission which looked into the scandal said there was a 'possibility' that he was involved in the appointment fixing.
'The commission was appointed for political reasons because they wanted to fix me and to some extent they have succeeded,' he told reporters. 'I wish to be investigated, I wish to have my day in court so that I can reveal things that actually happened, not things that probably happened.'
AGENCE FRANCE-PRESSE, BLOOMBERG