Malaysia's government summoned Singapore's high commissioner for talks on Tuesday, saying it was "extremely concerned" by media reports that the city-state helps Western intelligence agencies spy on its Southeast Asian neighbour.
Media reports citing documents leaked by former U.S. National Security Agency contractor Edward Snowden put Singapore, a key U.S. ally, at the centre of a spy network that reportedly taps undersea cables in the region.
"If those allegations are eventually proven, it is certainly a serious matter that the Government of Malaysia strongly rejects and abhors," Foreign Minister Anifah Aman said in a statement late on Monday.
"It cannot be overemphasised that spying against a good friend and neighbour is unacceptable and goes against the true spirit of, and commitment to, good neighbourly relations."
A souring of Singapore-Malaysia ties would worsen the fallout on U.S. allies from spying accusations in Southeast Asia. Last week, Indonesia downgraded diplomatic ties with staunch U.S. ally Australia following media reports that Canberra spied on President Susilo Bambang Yudhoyono and his wife.
Citing documents leaked by Snowden, Australia's Sydney Morning Herald said Singapore military intelligence helped U.S., British and Australian spy agencies harvest data passing through a major undersea cable called SEA-ME-WE 3 that is part-owned by Singapore Telecommunications (SingTel).
SEA-ME-WE 3, which stands for Southeast Asia, Middle East and Western Europe, connects more than 30 countries, including China, Indonesia, Malaysia, Saudi Arabia, Vietnam, Britain and France.
SingTel declined to comment, while Singapore's defence ministry did not respond to queries, and its foreign affairs ministry did not immediately provide a comment.
Malaysia and Singapore, which separated in 1965 after a brief union in the years following independence from Britain, have close economic ties, but relations have sometimes been prickly.
They have quarrelled over building bridges across the Johor Strait, land reclamation, water supply and racial issues.
Relations have warmed since Mahathir Mohamad, Malaysia's outspoken former prime minister, stepped down in 2003 and Singapore has become a key investor in Malaysia's southern Iskandar Development Region.