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KUALA LUMPUR, Nov 15 (AFP) - Malaysia's crumbling political opposition suffered a new blow Thursday as a rebel party applied to rejoin the ruling coalition which it quit 11 years ago.

The move by the Parti Bersatu Sabah (PBS) is seen as another indication that the position of Prime Minister Mahathir Mohamad has been strengthened by the September 11 terror attacks on the United States.

It comes just a month after the Chinese-dominated Democratic Action Party (DAP) pulled out of an opposition alliance with the Parti Islam SeMalaysia (PAS) over its hardline Islamic policies.

DAP chairman Lim Kit Siang said the decision by the PBS was "another sign of the sea-change which the September 11 events are wreaking on the Malaysian political landscape."

Malaysians were now "more wary of extremist and narrow-minded actions and policies," he said.

PBS deputy president Maximus Ongkili told the New Straits Times: "It is time for unity and reconciliation...let the past be a lesson for us to move forward together."

The PBS joined Mahathir's ruling National Front in June 1986, about a year after it was formed, but pulled out a week before the 1990 general election.

It is now the sole opposition party in the legislative assembly in Sabah state on Borneo island, the country's second-largest.

Mahathir, who has been in power for 20 years, welcomed the announcement that the PBS wants to rejoin the National Front, saying "the more the merrier".

The party's decision to quit the front in 1990 was described then as a "stab in the back", and Mahathir said it would never be accepted into the ruling coalition.

But on Wednesday, when news of the PBS decision to seek readmission first surfaced, Mahathir said he was willing to consider the matter because he was a "forgiving kind of person".

Mahathir's main opposition, the Alternative Front, has been hit hard by the DAP defection, leaving it representing only the Islamic hardline party PAS, the National Justice Party (Keadilan) of jailed former deputy prime minister Anwar Ibrahim, and the small Malaysian People's Party (PRM).

Keadilan, headed by Anwar's wife Wan Azizah Wan Ismail, was itself hurt earlier this month by the decision of a top Anwar ally to quit active politics.

Chandra Muzaffar, a strong critic of Mahathir, stepped down when his tenure as deputy president of the party ended on November 9.

The DAP's Lim described Chandra's decision as "a great loss to the struggle to bring greater stability and sanity in Malaysian politics".

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