Malaysian police on Sunday fired teargas and water cannon to quell a protest by thousands of ethnic Indians who defied stern government warnings to stay away from a rally in support of a $4 trillion lawsuit that blames Britain for their economic woes.

Police fired teargas and water cannon to disperse the demonstrators, a few carrying photos of Mahatma Gandhi [Images], who had gathered outside the Petronas Twin Towers, before marching towards the British High Commission in Kuala Lumpur.

The protesters, in response, threw bottles at police but were beaten and dragged into trucks, witnesses said, adding by afternoon the authorities managed to disperse the rally, declared as "illegal" by authorities.

The rally call had been given by Hindu Rights Action Force, a non-governmental organisation, which wanted to hand over a memorandum signed by thousands of ethnic Indians demanding Queen Elizabeth II to appoint her counsel to represent them in a class action suit against the British government for bringing Indians to the then Malaya as "indentured labourers" and exploiting them.

Malaysiakini, an independent news Web site, said: "Furthermore, the suit sought a declaration that the Reid Commission Report 1957 failed to incorporate the rights of the Indian community when Independence was granted, resulting in discrimination and marginalisation to this day."

Later in the day, one of Hindraf's lawyer A Sivanesan said that the group had for now called off the handing over of the petition to the British High Commission.

Ethnic Indians make up eight per cent of the population, and some feel that they have been marginalised.