Thousands of Malaysians are gathering to protest in the capital Kuala Lumpur and elsewhere, calling for Prime Minister Najib Razak to step down over a financial scandal.

He has faced public anger over a $700m (£455m) payment made to his bank account from unnamed foreign donors.

It was discovered last month during a probe into alleged mismanagement at the debt-laden state fund 1Malaysia Development Berhad (1MDB).

Najib has denied any wrongdoing.

Saturday's rally is expected to continue into Sunday and the pro-democracy group Bersih has also called for protests in the cities of Kota Kinabalu and Kuching on the Malaysian side of Borneo.

Kuala Lumpur authorities have rejected the group's application for a permit to protest and Malaysian police have declared the rallies illegal.

Police have said the rallies are unlawful. Photo: Reuters

Security is tight and eyes will be focused on any possible army intervention.

At the last big rally in 2012, police used water cannon and tear gas to disperse protesters.

Rehearsals will take place this weekend for the former British colony's 58th anniversary of self-rule.

Najib said in a statement on his blog he did not want a "provocation" to be triggered.

He said: "Whatever the disagreements or misunderstandings between us, national day should not be a stage of political disputes."

Significant support

The main accusation against Najib is that he took $700m from the indebted 1MDB, which he established in 2009 to try to turn Kuala Lumpur into a financial hub.

Cabinet ministers have said the money transfers were "political donations" from unidentified Middle Eastern sources, and that there was nothing improper. No further details have been given.

1MDB has said it has never given money to the prime minister and called the accusations "unsubstantiated".

Police have set up barricades and roadblocks. Photo: Reuters

But among the prime minister's critics, former leader Mahathir Mohamad said this week he did not believe the money was a donation and called again for Najib to resign.

The prime minister retains significant support from the long-ruling Barisan Nasional coalition and from within his party, the United Malays National Organisation.

At the start of the month there were protests after authorities suspended two newspapers and blocked access to a website that had reported on the 1MDB controversy.

What is 1MDB?

- The 1Malaysia Development Berhad state investment fund was established under Prime Minister Najib Razak in 2009 to transform Malaysia into a high-income economy.

- Critics say the fund overpaid for many of its investments and spent millions on fees to investment bank Goldman Sachs

- It began attracting attention at the end of 2014 when it started missing payments to creditors. It later emerged that the fund was mired in $11bn (£7bn) of debt.

- Najib has been accused of taking $700m from the fund - a charge which he has denied.

- Malaysia anti-corruption commission said it had verified that the money was a donation from unnamed foreign donors.