China has laid claim to nearly all of the sea and has built numerous military outposts on small islands and atolls, angering other countries with competing claims to the waters, including Malaysia.

Tensions have also flared between China and the US, which has sent warships through the South China Sea to assert international rights to freedom of navigation.

In a speech to parliament, Malaysian Foreign Minister Saifuddin Abdullah said the government wanted to "control the presence" of warships in the sea, in part by boosting the strength of its navy.

"We need to improve our asset capabilities to control the waters, especially in the context of facing superpowers in the South China Sea," he said.

"Even Malaysian warships in the navy are much smaller than coastguard boats from China."

Saifuddin added that Malaysia, or regional bloc the Association of Southeast Asian Nations (ASEAN), could ask the US and China to "reduce or not increase the presence of their ships".

Other claimants in the sea include Vietnam, the Philippines, Brunei and Taiwan.

Last month, a US Navy destroyer sailed close to the Chinese-controlled Paracel Islands in the South China Sea, to assert freedom of navigation rights.

It did not request permission from Beijing, or from Hanoi or Taipei, which also claim ownership of the archipelago.

China has long used its nine-dash line to justify its hold over the resource-rich sea, a move that the US has opposed, calling for the waters to remain open.