KUALA LUMPUR - Embattled Malaysian Prime Minister Najib Razak has removed Tan Sri Muhyiddin Yassin as his deputy just two days after the latter openly criticised the government's handling of allegations of abuse of public funds by state investor 1Malaysia Development Berhad (1MDB).

Muhyiddin was replaced by Home Minister Datuk Seri Ahmad Zahid Hamidi, a popular Umno vice-president, a move that may ease any potential fallout within the dominant ruling party. Zahid Hamidi will keep his home minister portfolio.

Muhyiddin said he accepted the decision "wholeheartedly".

"I will always be loyal to Umno's struggle. As Umno deputy president, I will continue to implement the mandate entrusted to me and serve to strengthen the party and restore the confidence of the public and the Malays in Umno," he said.

He thanked Mr Najib for allowing him the opportunity to serve in the Government as Deputy Prime Minister since 2009.

Muhyiddin's comments came after Mr Najib's announcement of the reshuffle.

"I can accept differences of opinion and criticism as part of the decision-making process. But as a Cabinet minister, differing views and opinions should not be aired in public forums that can negatively impact the perception of the government and nation. It is also contrary to the concept of collective responsibility," the prime minister said in a televised announcement on Tuesday.

"My decision to replace Muhyiddin with Zahid… was made in view of political considerations and the interests of the administration so that my administration will always be committed and focused to the country's development and to fulfilling the promises made by Barisan Nasional (BN) to the people in the 13th general elections."

Mr Muhyiddin had on Sunday delivered a scathing speech at an Umno divisional meet, saying the ruling BN coalition would lose an election if it was called now due to 1MDB, which has racked up RM42 billion (S$15 billion) in debt.

The Umno deputy president had called on Mr Najib to explain clearly issues concerning the state firm instead of asking the public to wait for investigations to be completed.

The only previous deputy prime minister to be sacked from office was Anwar Ibrahim in 1998, but it came amid allegations of sodomy and abuse of power and he was quickly expelled from Umno.

Mr Najib also dropped four other ministers and one deputy minister in his mid-term reshuffle, which had been widely expected for weeks.

He dropped Rural and Regional Development Minister Datuk Seri Shafie Apdal, an Umno vice-president whose public statements, especially on debt-laden 1MDB, have been aligned to that of Mr Muhyiddin. He was replaced by Ismail Sabri Yaakob.

Mr Najib ensured that Datuk Seri Shafie's home state of Sabah - a BN stronghold - would be well represented by appointing United Pasokmomogun Kadazandusun Murut Organisation president Wilfred Madius Tangau and state assembly speaker Salleh Said Keruak as full ministers.

Wilfred Madius Tangau replaced Dr Ewon Ebin as Science, Technology and Innovation minister, while Datuk Seri Salleh took over the communications and multimedia portfolio from Datuk Seri Ahmad Shabery Cheek, who is now Agriculture and Agro-Based Industry Minister.

Mr Salleh has been making frank statements concerning 1MDB of late, but he praised Mr Najib's leadership while calling former premier Tun Dr Mahathir Mohamad - Mr Najib's loudest critic - an incoherent embarrassment.

The other two ministers who were dropped were Natural Resources and Environment Minister Datuk Seri G. Palanivel, who was replaced by Datuk Dr Wan Junaidi Wan Tuanku, and Domestic Trade, Corporations and Consumerism Minister Datuk Seri Hasan Malek, who was replaced by Datuk Hamzah Zainudin.

Parliament's Public Accounts Committee chief Nur Jazlan Mohamed was appointed Deputy Home Minister. He led the bipartisan panel in its inquiry on 1MDB this year and is to interview the company's top executives next month.

The reshuffle of the Cabinet, now the largest ever with 37 full ministers, is to strengthen it ahead of a general election that must be called by 2018, the Prime Minister said. In total, he appointed seven new ministers.

Mr Najib's leadership has come under increasing scrutiny especially due to his role in 1MDB. The Wall Street Journal had alleged on July 3 that US$700 million (S$956 million) in funds linked to 1MDB had been deposited over the past two years into the personal accounts of Mr Najib, who is 1MDB's chief advisor.

He has denied ever using state funds for personal gain but has failed to clarify whether or not he received the money.