(AFP) The country will not cut its water supply to Singapore, Prime Minister Dr Mahathir Mohamad pledged after talks with visiting Senior Minister Lee Kuan Yew late yesterday.

Mahathir's statement on the sensitive issue came just hours after another minister had said the country may not be able to continue supplying water when a contract expires in 2061.

"Malaysia's policy is we will not cut off supply of water. There will be no cutting off of water supply to Singapore," Mahathir said in response to a question at a news conference after a meeting with Lee.

Earlier, however, Consumer Affairs minister Muhyiddin Yassin said after his meeting with Lee: "The principle is Malaysia first..."

"Because the main water supply comes from Johor river there may not be sufficient water for Johor in the next 20 to 30 years time."

Agreement reached

Singapore obtains half of its daily water needs from Johor state, which neighbours the island nation. Its two water agreements with Malaysia expire in 2011 and 2061.

But Lee and Mahathir were smiling as they walked in for a joint news conference after meeting at the prime minister's offices in the new administrative capital Putrajaya.

Mahathir said they had reached agreement on broad principles over outstanding issues between the two nations, some of which have created friction.

He mentioned water supplies, the construction of a bridge and a rail tunnel linking the countries, the use of local airspace by Singaporean aircraft and the withdrawal of pensions by local workers.

"We have made progress in that we have agreed on basic issues but there are certain issues which will be attended to by the officials. After that the prime ministers of both countries will meet and hopefully we can settle the issues," Mahathir said.

Private chat

Lee, who met privately with Mahathir for half-an-hour before they were joined by their foreign ministers and officials, said: "We have reached an agreement on a basic skeleton."

"It has reached a point where details can be worked out in the form of words by officials of both sides so that the two prime ministers can agree on the draft and finalise it and sign it."

Asked for a time frame for the signing of the agreement, Mahathir said: "We would like to do it as soon as possible. We will try our best."