KUALA LUMPUR - Parts of the Malaysian capital came to a standstill on Saturday as tens of thousands of protesters gathered for a rally to demand the resignation of Prime Minister Najib Razak over an alleged multi-million-dollar transfer of state funds to his personal account.

Local media reports estimated the crowds at up to 80,000, while the organiser Bersih said the rally attracted 200,000 people at its peak during the day.

According to the Malaysian Insider, thousands were still gathered at Merdeka Square at 3am on Sunday morning, with people sleeping in the road and on the pavements.

"Young children are still seen among the protesters around Dataran Merdeka, some of them shouting "Bersih!" whenever groups of other rally goers begin chanting" the site said in a live blog.

One family with young children had come from Port Dickson and said they were excited to be in the capital city for the marathon 34-hour rally.

Forsyn Soh, 41, brought along her daughter, aged six, said the Insider.

"I told her to stay at home, but she insisted on coming," Soh said, adding that this was the first time she and her family were participating in a street rally.

"I feel very patriotic coming to the rally. I'm here for the same reason everyone else is, for justice."

Every few metres, rally goers are offering free food, from nasi lemak and fried bee hoon to sandwiches, said the Insider. They said the food was sponsored by "major corporations".

Food and drinks were also being sold at makeshift stands, the site said, while 24-hour stores in the vicinity like 7-11, were seeing a steady stream of yellow-clad customers.

Small rallies were also held in Kuching and Kota Kinabalu, as well as overseas in cities including Sydney, Melbourne, Auckland, Shanghai and Hong Kong, according to Bersih, an electoral reform group.

President of the Malaysian Bar Steven Thiru confirmed the arrest of several people in Malacca under the Printing Presses and Publications Act for wearing Bersih T-shirts, said the Malaysian Insider.

PKR deputy information chief Ginie Lim had earlier tweeted that more than 20 people were arrested under the act about 9.30pm. the Insider said.

In Kuala Lumpur, crowds headed to the five meeting points - Sogo shopping mall, National Mosque, Dataran Maybank, Brickfields and Central Market hours before the start of the rally at 2pm. All five groups then marched towards the historic Dataran Merdeka, the venue of Independence Day celebrations on Aug 31.

Among the prominent figures at the rally were Bersih chief Maria Chin Abdullah, opposition leader Wan Azizah Wan Ismail, wife of jailed opposition politician Anwar Ibrahim, Selangor Menteri Besar Azmin Ali, and Penang Chief Minister Lim Guan Eng.

"We are not here to topple the government but to topple a corrupt political system,'' said the Bersih chief. "We must continue the fight to reform our institutions and political system."

Wan Azizah, president of Parti Keadilan Rakyat (PKR), said: "Don't forget Anwar Ibrahim. Don't forget those who have sacrificed, those known and unknown. We must continue their fight to bring justice and free our country."

Despite a government ban, many protesters wore the yellow "Bersih 4" T-shirt.

"People are not afraid anymore. We want our right to be heard," a local university lecturer, who declined to be named, told The Straits Times. "We feel that as time goes by, things are getting worse. Everyone knows about the corruption in our country. Until now we don't have clear answers on (state investor) 1MDB and the 2.6 billion ringgit that PM consider to be a donation,'' said the lecturer who was outside Sogo.

In some places, there was a bazaar-like atmosphere with stalls selling Bersih merchandise, and people singing and playing music.

Protest leaders announced a break for dinner at 4.30pm before resuming the rally at 9pm.

Police had cordoned off Dataran Merdeka, which will be the venue of Sunday night's Independence Day countdown. Bersih had promised to gather only in the vicinity of the square and not enter it.

The rally took place in defiance of warnings from the police and the government that the assembly was illegal and would jeopardise national security.

The government had banned not just printed materials promoting the rally, but also any clothing that was yellow and which contained the words "Bersih 4".

Under the controversial Printing Presses and Publications Act, those in possession of these items can be fined up to RM5,000 (S$1,687) and those guilty of producing or distributing them can be jailed up to three years.

But organisers were undeterred by the Home Ministry's ban and told supporters to carry on wearing the yellow T-shirt. The Bersih chief said those who wanted "to be cheeky" could try adding a "point zero" after the number 4 on the shirt.

In a statement on Saturday, opposition Parti Islam SeMalaysia (PAS) said the Barisan Nasional (BN) government need not be afraid of T-shirts,

"They should be afraid of the credibility of Prime Minister Najib Abdul Razak, the dire state of the country's economy and investors' confidence due to the image of Najib which has crumbled," PAS Deputy President Tuan Ibrahim Tuan Man said.

Malaysia's anti-graft agency has said the funds paid into Najib's account was a donation from the Middle East, which came just before a 2013 election, but the identity of the donor has not been revealed. It said the money was not from debt-ridden 1MDB.

Najib, 62, has denied any wrongdoing and said he did not take any money for personal gain.