(Adds Anwar, PM)
KUALA LUMPUR, May 11 (Reuters) - A Malaysian court said on Monday that the ruling coalition's takeover of a state government was illegal and handed power back to the opposition, a surprise decision that was a blow to the country's new premier.
Perak, in northwestern Malaysia, is the focal point of tensions between the opposition and the National Front government following the takeover of the state government in a move orchestrated by new Prime Minister Najib Razak in February.
Last week, when the state assembly convened for the first time since the ousting of the People's Alliance government, 90 opposition supporters were arrested, sharply increasing political tensions in this Southeast Asian country of 27 million people.
The High Court in Kuala Lumpur said on Monday that there had not been a vote of no-confidence in People's Alliance Chief Minister Mohd Nizar Jamaluddin in the state assembly and therefore he still held office.
The opposition is to call for new state elections, which most political analysts expect them to win, adding to pressure on Najib and on the National Front coalition that has ruled Malaysia since independence in 1957.
The coalition stumbled to its worst ever results in national and state elections a year ago and has since lost four out of five parliamentary and state by-elections to a resurgent opposition, causing jitters in financial markets.
"Nizar's next move will be to seek the Sultan's consent to immediately dissolve the state assembly so that we can end this stalemate in the state of Perak," Lim Kit Siang, one of the leaders of the opposition alliance told Reuters.
GOVERNMENT TO APPEAL
The impasse in Perak has added fuel to an already combustible political situation at a time when Malaysia is grappling with its first recession since the Asian financial crisis of a decade ago. [ID:nKLR453196]
Last week, investment bank HSBC warned that political tensions would weigh on the ringgit in the wake of the arrests in Perak.
The National Front state government was ordered by the court to leave office immediately in a move that was praised by opposition leader Anwar Ibrahim, who himself will be in court in July on what he says are trumped-up charges of sodomy.
"In the past, the judiciary was deemed to be at the behest of the political masters. There is this new sign of courage from the judiciary," Anwar told Reuters.
The government however is to appeal the verdict, possibly setting the stage for more clashes between it and the opposition and prolonging the political stalemate.
"We feel that we are on a sound footing so we will appeal this decision," Najib told a press conference in the administrative capital of Putrajaya.
Najib took office on April 3 and was charged with stopping the political rot that has set in to the National Front and his party, the United Malays National Organisation which is the lynchpin of the government.
He has so far failed to do so and ran two of the parliamentary by-election campaigns in which the National Front lost, while three other by-elections came just days after he took office and were seen as a referendum on his premiership.
If an election is not held, then there will be another ratcheting up of political tension, analysts warned.
"The judgment means that Barisan Nasional's (National Front's) move to capture power in Perak last week was a total waste of time, resources and money," said James Chin, professor of politics at the Monash University campus in Kuala Lumpur.
"If the election is not called, the new Barisan Nasional government in Perak will have no legitimacy," Chin said. (Additional reporting by Razak Ahmad, Soo Ai Peng and Julie Goh; Editing by Bill Tarrant)
Our Standards: The Thomson Reuters Trust Principles.