Thousands of anti-government protesters, known as yellow-shirts, have defied a police crackdown and staged a rally in Malaysia's capital, calling for the resignation of Prime Minister Najib Razak over a corruption scandal.

Defiant demonstrators marched from differed spots towards downtown Kuala Lumpur amid tightened security measures on Saturday, chanting "Save Democracy" and "Bersih, Bersih," the name of the pro-democracy group that organized the rally, which means “clean” in Malaysian.

"Our country is being governed by clowns and crooks. So I'm here to protest against our prime minister," said artist Fahmi Reza, carrying a poster of a clown-faced Najib.

"We want to see Malaysia more developed and not robbed of billions of ringgit," Wan Aisyah Wan Ariffin, a yellow-shirt supporter, said.

The protest took place hours after the arrest of several people in connection with the rally, including Bersih Chairwoman Maria Chin and Mandeep Singh, another official at the group, as well as other opposition leaders and student activists.

The police also arrested another Bersih leader Hishamuddin Rais on Saturday at the protest area, Bersih said on Twitter.

Leading human rights group Amnesty International censured the crackdown, urging the immediate release of the Bersih activists whom it described as prisoners of conscience.

"These arrests are the latest in a series of crude and heavy-handed attempts to intimidate Malaysian civil society activists and other human rights defenders," Amnesty said in a statement.

Najib, who has denied any wrongdoing, accused Bersih of being a tool for opposition parties to unseat his government.

"Their movement is deceitful. It is clear that these street protests are in fact the opposition disguised as an independent NGO working to unseat a democratically elected government," Najib, who is attending the Asia-Pacific Economic Cooperation (APEC) summit in Peru, said on his website on Friday.

Pro-government supporters, known as the red shirts, also staged a counter-rally on Saturday amid fears of possible clashes between the rival protests.

Police have banned both pro- and anti- government protests. Jamal Yunos, a member of the ruling United Malays National Organisation (UMNO) party and leader of the red shirts, was reportedly detained before the protests started.

The scandal erupted after a report by The Wall Street Journal last year, prompting the US Justice Department to confiscate more than $1 billion in assets it says were purchased with money stolen from the 1MDB.

The magazine also said in early July that about $700 million had been transferred to Najib’s private accounts before the 2013 general elections.

Malaysian judiciary authorities have cleared him of any criminal wrongdoing in the case, saying the money was from donations from the Saudi royal family.

Critics have dismissed the ruling, arguing that the transfer of personal donations did not rule out corruption.

Saudi Foreign Minister Adel al-Jubeir said in April that the $681 million Riyadh offered to the Malaysian premier was a “genuine donation with nothing expected in return.”

Najib returned from a four-day visit to Saudi Arabia back in March.