Malaysian police fired tear gas and chemical-laced water on Saturday at thousands of demonstrators demanding an overhaul in electoral policies that they call biased ahead of national polls expected soon.

At least 25,000 demonstrators had swamped Malaysia's largest city in one of the Southeast Asian nation's biggest street rallies in the past decade.

The demonstration reflected concerns that Prime Minister Najib Razak's ruling coalition - which has held power for more than 50 years - will have an unfair upper hand in elections that could be called as early as June.

Activists have alleged that the Election Commission is biased and claimed that voter registration lists are tainted with fraudulent voters.

Demonstrators wearing yellow T-shirts poured into downtown Kuala Lumpur, massing near a public square that police had sealed off with barbed wire and barricades.

"I'm here because I'm a Malaysian and I love my country," said information technology manager Burrd Lim. "There's no election that's perfect, but I want one that's fair enough."

Authorities said an opposition-backed pressure group that organized the rally had no right to use Independence Square, a symbolically important venue that hosts parades and high-profile celebrations.

The demonstration remained peaceful for several hours, with participants singing the national anthem, waving banners and chanting slogans.

Organizers declared the event a success and asked people to head home. But just as some were walking away, a small group appeared to suddenly breach the police barriers, prompting authorities to fire tear gas and water laced with stinging chemicals at portions of the crowd.

Demonstrators fled into streets and stores nearby, but witnesses said baton-armed police backed by trucks continued firing tear gas at some of them for at least half an hour before much of the crowd was dispersed. Authorities were seen detaining at least 20 people.

Federal police spokesman Rasdi Ramli estimated there were about 25,000 demonstrators, but many witnesses and some Malaysian news organizations said there were far more. Independent news website Malaysiakini said there was 100,000, while The Sun newspaper estimated 80,000.

The rally's organizers also want longer election campaigning periods and changes to ensure citizens living abroad can cast ballots, as well as international observers for the polls and fairer access for all political parties to the government-linked media.

Government officials and electoral authorities insist the activists' concerns are overblown.

"We accept that there are issues," Foreign Minister Anifah Aman said late on Friday. "We have worked very hard to address them, introducing a raft of reforms to ensure that our country's next election is the freest and fairest ever."

After an estimated 20,000 demonstrators staged a similar rally in Kuala Lumpur last July, authorities established a panel to study electoral regulations and agreed for voters to have their fingers stained with indelible ink while casting ballots to curb fraud and multiple voting.

Authorities used tear gas and water cannons to break up July's rally and briefly arrested about 1,600 demonstrators.

"Today is a major test case for basic freedoms in Malaysia, starting with the right to peacefully march and assemble," said Phil Robertson, Human Rights Watch's deputy director for Asia.

Thousands of Malaysians living abroad and rights activists in dozens of major cities in Asia, Australia, Europe and the United States are expected to also stage demonstrations on Saturday in solidarity with those in Kuala Lumpur.

Speculation has intensified that Najib might dissolve Parliament next month and seek a new mandate in June, even though polls do not need to be held until mid-2013.

The National Front, which has governed Malaysia since independence from Britain in 1957, suffered its worst performance in 2008 elections, when it lost more than a third of Parliament's seats amid public discontent over problems such as corruption and racial discrimination.