Pale and drooping a little from the fast, Anwar appears with bare feet and apologises for a short delay so he can say his fourth round of prayers for the day. A quarter-hour later, the opposition leader is back, shod now in black ostrich-skin brogues, to talk about his extraordinary bid to convince the Government he should be in charge.

The psychological warfare is getting fraught. Under a looming challenge in his own ranks and facing popular discontent from raising inflation, the Prime Minister, Abdullah Badawi, had just waved a dire warning in front of Anwar, labelling the former deputy prime minister a "threat to the economy and possibly security" - code for Anwar's proximity to the wrath of the draconian Internal Security Act. "For the PM to say that, it's something that cannot be taken lightly," says the political analyst Khoo Kay Peng.

In a formal statement yesterday, the US State Department said Abdullah's remark was "extremely troubling" and Washington viewed with "grave concern" the possibility the ISA might be used to detain opposition political figures. Anwar, too, wonders if he is heading back to prison. He acknowledges "the next option" is his arrest.

A decade ago, Anwar's last bid for power, against his then boss, the prime minister Mahathir Mohamad, ended in disaster. Hit with dubious charges of sodomy and attempted interference with a police investigation, he was jailed until freed in 2004 when the conciliatory Abdullah succeeded Mahathir.

Now 61, Anwar has closed in on the former Barisan Nasional (National Front) ruling coalition that so humiliated and punished him in 1998, when as its deputy prime minister and finance minister he tried to introduce market-based "reformasi" to Malaysia's heavily state-directed economic system in the midst of the Asian financial crisis.

In elections in March, his improbable People's Alliance of secular reformist, Chinese-based leftist, and Islamist parties broke the Barisan's two-thirds majority in the federal parliament, and won control of five of Malaysia's 13 states. On expiry of a disbarment resulting from his convictions, Anwar returned to parliament on August 26 in a by-election in his home state of Penang - despite another sodomy charge.

This week Anwar launched a bold claim to power, choosing Federation Day on September 16, marking Malaysia's 1963 formation from former British-ruled states in Malaya and Borneo, rather than the Merdeka (Freedom) anniversary on August 31, celebrating the earlier independence of the Malay peninsula states in 1957.

The clever symbolism aimed to draw Malaysia's large but often victimised racial minorities - Chinese, Indians and the Dayaks and other Borneo tribes of Sarawak and Sabah - into alliance with reform-minded Malays, against the Barisan whose main component, the United Malays National Organisation, stresses the 1957 date as a triumph of the Malay majority.

After an emotional mass gathering the night before at a Kuala Lumpur stadium - where many in the crowd wept while singing the national anthem, Negaraku ( My Country ) - Anwar announced he had "more than enough" defections from the Barisan for his People's Alliance to form a government, and asked to meet Abdullah to effect a smooth transfer of power. Unsurprisingly, Abdullah derided the request, as he did Anwar's later call to reconvene parliament.

Yesterday Anwar and his colleagues from the three Alliance parties - his People's Justice Party, the Chinese-based Direct Action Party, and the All-Malaysia Islamic Party - were meeting on their next moves. Barring intervention by Malaysia's King, Sultan Mizan Zainal Abidin, who has the constitutional power to decide where majority support lies, Anwar seemed to be facing a nervous wait until parliament resumes after the Ramadan break on October 13.

In this period he faces a relentless onslaught on his credibility by the state-controlled broadcast media and the mainstream newspapers, which are mostly owned by UMNO and other Barisan parties. They call him a conman, a bluffer and a political chameleon for a career that has spanned activism as an Islamist student leader, an UMNO minister under the autocratic Mahathir, and latterly a liberal reformist.

He and his colleagues are also at risk from the highly politicised police, whose secretive Special Branch has morphed from fighting communist insurgents to keeping Barisan in power. Two years ago Lim Guan Eng, now Penang's chief minister, said the branch held 7000 of Malaysia's 93,000 police. Some security experts, however, say the figure is much higher.

The Special Branch wields the Internal Security Act, which allows suspects to be held for 60 days at its Buket Aman headquarters in Kuala Lumpur, where interrogators specialise in breaking down detainees through prolonged questioning, sleep deprivation, and disorientation. Then they can be locked away without trial for renewable two-year terms.

Last week the Malay-commanded Special Branch arrested Teresa Kok, an MP for the Direct Action Party, after an UMNO-owned Malay language newspaper ran spurious reports that she had tried to stop a mosque broadcasting the morning call to prayer. The country's best-known blogger, Raja Petra Kamaruddin, was also taken in under the ISA, and another journalist was briefly detained. Only five arrests of Anwar's MPs could change a no-confidence vote, if and when it happens.

"I'm realistic enough to understand there are risks involved in this work," says Anwar. "When a party has been in power more than half a century, to imagine losing their grip on power is going to be horrendous, unthinkable, and they may resort to this measure." He notes the "malicious, scurrilous attacks on my character" and Kok's detention.

Yet in other ways, events are moving Anwar's way. Abdullah has squandered the goodwill that greeted him after Mahathir's 22-year rule, marked as it was by big spending on white elephant projects, disputes with Western countries, attacks on judicial independence, and intimidation of critics.

Malaysia's 1.1 million-strong civil service is the region's most bloated, says the Citibank analyst Wei Zheng Kit, and prone to massive waste and cost overruns. Without oil revenue, he says, the Government would have to borrow for even rudimentary day-to-day operations. Malaysia is due to become a net oil importer between 2011 and 2014, and will exhaust present reserves by 2020. Despite ballooning subsidies, inflation hit 8.5 per cent midyear.

After the latest ISA arrests, Abdullah and his Government took another blow with the resignation of a respected lawyer, Zaid Ibrahim, brought in after the March elections as a special minister to effect judicial reforms. His efforts had been "stonewalled" within the Government, Zaid says.

Says political analyst Khoo: "The last two weeks shows that confidence in the Government has actually deteriorated, if you look at internet postings and talk to people in the street."

Still, Anwar comes with many question marks. His urbanity and friendships with an impressive range of eminent foreigners - the Nobel prize economist Amartya Sen, the former IMF chief Michel Camdessus, and the former US deputy defence secretary and World Bank chief Paul Wolfowitz - have been exploited for chauvinist attacks on him by UMNO figures.

He has his work cut out explaining to Malays why the positive discrimination of the past 40 years - preference for university places, government jobs, finance, cheaper houses, and a 30 per cent slice of new investments - mostly benefit a tiny well-connected elite through UMNO cronyism and patronage, and should be replaced with policies based on need rather than race.

Khoo says the large Malay turnout for Anwar in the byelection showed his message of making Malaysia more attractive to investment and thereby boosting growth, rather than first redistributing wealth, was getting through, particularly to Malays under 45.

On the other side, non-Malays wonder about his Islamist background, and recall his role implementing pro-Malay discrimination as a UMNO minister. "It took us a while to come to terms and go from Anwar who was education minister and actually did a lot of damage to the Chinese school system, to the new reformist Anwar," said Dominique Ng, a Kuching lawyer who won a Sarawak state seat for Anwar's party in March. Ng is convinced "the new Anwar can be the one who saves Malaysia".

Anwar bears the attacks without apparent grudge, though he says they are still hard for his wife, Wan Azizah, and their children. "Don't worry about these attacks," he says. "They've been going on for the last 10 years: treason, American agent, Jewish agent, Chinese agent, pro-Hindu, a sodomist, a sexual pervert. What else? Solitary confinement, beaten up …"

His agenda for Islam in Malaysia is one he has been pursuing for many years, well before his falling out with Mahathir. While Islam should remain the religion of the state, Malaysian Muslims had to accept the pluralism of their society and engage with other religions. His ideal is the convivencia or co-existence of Christians and Jews under Moorish rule in medieval Andalusia.

The jail ordeal, he says, strengthened his concern for freedom. It "teaches you quite a lot", and "the passion for democracy, for justice, is far more pronounced".

"Basically these years of sojourn and wilderness did help," Anwar says. "You empathise with people as people. I am very Malay; I love the language; I follow the Indonesian literature a lot … I am also a committed Muslim. I fast, I pray, but that does not make us intolerant of other cultures."

His tolerance extends to the contentious issue of apostasy or conversion, raised in the recent Lina Joy case in which religious and secular courts blocked a Malaysian woman registering her conversion from Islam to Christianity. "The issue of faith is an individual's choice: it's not my business," Anwar says. "I am a Muslim: I would love it if she remains a Muslim. I wouldn't mind spending 15 minutes with her, saying: 'Look why did you leave, why this and that?' " At issue, he says, is the higher objective of the sharia, the Koranic law. "It is freedom of conscience."

So who is he? "They say I'm a chameleon because to the Western journalists I sound liberal, to the Muslim crowd I echo the Koran. It's true. I don't go into the little village and quote Shakespeare, and when I talk to Chinese I use a few words of their language and quote Confucius. But the fundamental pillars remain unchanged … I am still a Malay, a committed Muslim, and very much a Malaysian."

Hamish McDonald is the Herald's Asia-Pacific editor.