Zahid was arrested by the country's anti-graft agency on Thursday.

The arrest comes after investigations into allegations of abuse of power, criminal breach of trust and money-laundering involving funds from a family-linked foundation.

Zahid is alleged to have used 800 thousand ringgit ($A272,159) of the foundation's funds to pay off credit card bills.

Zahid, who heads the opposition party United Malays National Organisation (UNMO), is the latest prominent figure in Malaysian politics to be arrested following ex-premier Najib Razak and his wife Rosmah Mansor.

Zahid was deputy prime minister under Najib, whose government was ousted in elections in May amid widespread anger over a corruption scandal that engulfed the state fund 1MDB.

The state fund is the subject of a sweeping international investigation by at least six countries - including the US, Singapore and Switzerland - over alleged money laundering and graft by high-level officials.

The scandal became public in 2015, when the Wall Street Journal reported that Malaysian investigators had traced almost $US 700 million - at 2015 exchange rates - that had been deposited into Najib's personal bank account via banks, companies and agencies linked to 1MDB.

Australian Associated Press