He announced cuts in Cabinet ministers' allowances, a freeze on civil service recruitment, a scaling down of official events and delays in mega-projects, purchases of assets and other unnecessary expenditure.

The savings would add up to RM2 billion (S$830 million) a year, he said.

His action was seen as an attempt to undercut the country's opposition, which has swiftly seized on widespread unhappiness at the fuel price increases.

Opposition leader Anwar Ibrahim went so far as to declare that he would cut fuel prices within a day of his coalition wresting power from the ruling Barisan Nasional.

Datuk Seri Abdullah said that entertainment allowances for ministers would be trimmed by 10 per cent and their overseas holidays restricted to the region, for no more than a week.

Previously, ministers enjoyed annual paid vacations to any destination.

Working trips for officials would also be cut and hiring in the civil service frozen except for critical positions, he told reporters after a meeting to review the impact of the fuel price hikes.

'The government also feels the people's pain and the top leadership should lead by example in facing this challenge,' he said.

To ease the burden of cash-strapped Malaysians, he said that from this Saturday, owners of small- and medium-sized vehicles could start collecting cash rebates to offset the impact of the higher fuel prices.

Following protests from public transport operators, he pledged to increase the amount of subsidised diesel they were allowed to buy.

Last week, the government partially lifted longstanding fuel subsidies, which led to the price of petrol rising overnight by 41 per cent, and diesel by 63 per cent.

Mr Abdullah, facing an uncertain political future following his coalition's dismal showing in the March general election, said yesterday that the decision to raise fuel prices had been a tough call.

'In all honesty, it was a difficult and agonising decision to make. Many times, we have been tempted to walk away from such a difficult decision,' he told an energy conference yesterday.

The measures he outlined yesterday did not go down well with some analysts who felt they did not go far enough to addressing the people's unhappiness.

Political analyst Khoo Kay Peng told the Reuters news agency: 'There are more critical things that the government should look into, such as cutting down and streamlining the public sector.'

But PM Abdullah promised to do even more, saying: 'This will not be the last announcement. There will be more to come.'

hazlinh@sph.com.sg

MORE REPORTS ON FUEL PRICE FALLOUT : ASIA & WORLD