Datuk Seri Najib reiterated what he has said many times before - he had never met the slain woman and did not know her.

Private eye Balasubramaniam Perumal has claimed that Mr Najib had confessed to another person to having a 'sexual relationship' with the woman.

Asked at a news conference whether this was true, Mr Najib said: 'Absolutely not. Because I have never, never met her at all.

'I treat the statutory declaration as a terrible lie, a malicious fabrication that is defamatory and aimed at tarnishing my image.'

He was referring to Mr Balasubramaniam's sensational statutory declaration.

The private eye's meet-the-press session was presented by opposition chief Anwar Ibrahim, as the high-stakes fight between him and Mr Najib escalated.

Mr Balasubramaniam did not speak at the news conference but copies of his sworn statement were distributed to reporters.

The two men are seen as the leading contenders to succeed Prime Minister Abdullah Badawi.

Datuk Seri Anwar's salvo came six days after he was put on the defensive when his aide Saiful Bukhari Azlan, 23, claimed he was sexually attacked by his former boss.

Mr Anwar said the young man's accusations were part of a conspiracy to block his political career.

Mr Najib, in his news conference, made a surprising revelation that he had met Mr Saiful before the young man lodged a police report claiming sodomy.

The Deputy Premier said he was merely trying to be helpful, but the revelation would likely fire up claims in the Anwar camp that Mr Najib was using the young man to frame their leader.

Mr Najib said: 'He came to see me, complaining that he was sodomised by Anwar Ibrahim. I wasn't even sure if it was true or not.

'I suppose he needed help, and he knew one of my officers. That's all. He looked like he was in fear.'

That meeting was the first between them, he added.

He had said on Monday that pictures of Mr Saiful with an officer of the Deputy Prime Minister's Office meant nothing - the young man had gone to his office to check about a scholarship application.

Mr Najib said the accusations made against him yesterday by Mr Anwar, using the private eye, was an attempt by the opposition leader to take the focus off the sodomy allegations.

'I am very sure this action is a desperate move by Anwar Ibrahim to divert attention from the sodomy allegation he is facing.'

Asked whether he would be making a police report against Mr Balasubramaniam or taking legal action against him, Mr Najib said he would leave it to the police.

The open clash between the two top leaders has raised tensions in Malaysia.

On Wednesday, police chief Musa Hassan warned that the armed forces would be called in to maintain public order if needed, sparking talk of emergency rule.

The police chief said this at the start of a six-day joint police-armed forces exercise, their first joint exercise.

But Datuk Seri Abdullah denied that an emergency would be imposed.

'I want to make it clear that the situation is peaceful and under control...

'The (army and police) can have any joint exercise they want to. They want to coordinate. This is not to be treated and regarded as something that we need to worry about.'

ASSOCIATED PRESS, AGENCE FRANCE-PRESSE, BERNAMA