Visiting Malaysian Prime Minister Najib Razak met his Singapore counterpart, Mr Lee Hsien Loong, and 'we both agreed that the legacy issues should not be in the way of us moving ahead', Mr Najib said at a joint press conference.

'I think we both recognise this... there is much, much more to gain from productive and co-operative arrangements rather than allowing these things to hamper and even dampen the relationship.' Mr Lee said he had fruitful talks with Mr Najib, who arrived on Thursday on his first official visit to Singapore since becoming prime minister last month.

'We covered a range of areas of cooperation between our two countries,' said Mr Lee, who described the state of bilateral relations as 'warm'.

Both leaders agreed that their foreign ministers should meet in a bid to resolve outstanding issues.

Bilateral ties have been periodically rocked by disputes since Singapore was ejected from the Malaysian federation in August 1965 - an episode that still rankles on both sides.

The rows included the price of water that Malaysia supplies to the city-state, Singapore's military access to Malaysian airspace and the future of Malaysian-owned railway land jutting deep into the city-state.

Malaysia's ambitions to build a new bridge to replace an ageing and overcrowded causeway triggered intense friction between the two neighbours, and the plans were dropped in 2006.

'It is something which should not drag on because we do not want outstanding legacy issues to affect our own warm relationship,' Mr Lee said.

Mr Lee also expressed Singapore's interest in the Iskandar project, a massive economic zone in Johor.

'We see this as positive for Singapore and we see this as something we can do if the Malaysian side finds it is useful and believes that we can give a contribution. -- AFP

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