Agriculture minister Mustapa Mohamed said the government would also spend an additional 254 million ringgit to boost local rice production, as the price of Asia's staple diet continued to soar.

'We want to make sure that the interest of the low-income earners are protected and that is why the government is willing to accept a big loss as a result of the large subsidies we are giving,' Mr Mustapa told reporters.

'We cannot afford to let down the poor in society who will be hit the hardest by the increase in rice prices,' he added.

Prime Minister Abdullah Ahmad Badawi late on Monday announced the country would, for the first time, spend at least 725 million ringgit to subsidise foreign rice imports to keep retail prices of the staple affordable.

He also said the the price of two popular local rice types - a higher quality and an average grade - will be capped from June 1 to keep manufacturers from raising their prices further and burdening consumers.

Mr Mustapa said Thailand had sold 200,000 metric tonnes of rice to Malaysia as part of an emergency purchase agreement last week to supply 5000,000 tonnes of rice to the country to bolster its stocks.

The price of imported Thai white rice has gone up by 164 percent from 371 dollars per metric tonne in 2007 to 980 dollars per metric tonne this year.

He said the 200,000 tonnes were expected to reach Malaysia by the end of June.

Malaysia, which produces 70 per cent of its rice needs and imports the rest from Thailand, heavily subsidises more than 20 daily food items, including milk and salt.

World rice prices have soared this year, a trend blamed on higher energy and fertiliser costs, greater global demand, droughts, the loss of rice farmland to biofuel plantations, and price speculation. -- AFP