Opposition leader Anwar Ibrahim said more than 31 government lawmakers were willing to switch sides, enabling him to form a new administration with a slim majority, and demanded a meeting with Abdullah to discuss a handover.
But Abdullah was defiant, despite signs of cracks in the ruling coalition which has been in disarray since March elections that saw the opposition dramatically increase its numbers in parliament.
"This is a waste of our time. It is a game of political lies by Anwar Ibrahim and the people are choosing to believe him," Abdullah said at a press conference, adding he did not feel compelled to step down.
"Why should I be pressured? It is mere dreams. If at all it is true, (Anwar) would have announced it by now. The whole world would have known," he said, challenging the opposition leader to release the names of the defectors.
"Do you think he would ask for a meeting with me to discuss a transition? He would storm into my room with hundreds behind him, shouting victory. This is Anwar's style."
Anwar said he would give Abdullah a few days to agree to a meeting before exploring other options. That could include seeking an audience with Malaysia's king, Tuanku Mizan Zainal Abidin, to claim a mandate to rule.
"We now have the required numbers to form a government. The PM cannot deny us and refuse to engage with an alternative government. I appeal to the government to allow a smooth transition," he told a press conference.
Abdullah ruled out talks with his nemesis, setting up a showdown between the pair.
Anwar urged the government not to arrest his new ministers under draconian internal security laws, or declare a state of emergency in an attempt to prevent him from seizing power.
His comments came after a crackdown last week when three people -- an opposition politician, a prominent blogger and a reporter -- were arrested under tough security laws that allow for detention without trial.
"I wish to emphasise that the change in the process should be peaceful. We do not want documents and other assets of the government destroyed. I would like to advise the Barisan Nasional leaders not to abuse their powers, not to arrest or torture our leaders," Anwar said.
The 61-year-old opposition leader, a former deputy premier who was sacked and jailed a decade ago, said it was difficult for members of the ruling coalition to accept that "their ship is sinking."
In March elections Anwar's three-member opposition alliance gained 80 seats in the 222-seat parliament, with the coalition holding 140 and losing its two-thirds majority for the first time.
Anwar then set himself a target of September 16 to secure the support of at least 30 government lawmakers needed to topple the government.
Abdullah also dismissed suggestions he faces a revolt from within his cabinet, after six ministers spoke out against last week's crackdown on dissent.
Zaid Ibrahim, the minister in charge of legal affairs, quit over the arrests and in departing remarks painted a damning picture of the coalition as paralysed by internal strife and racial divisions.
"They were giving their views and this is because I allow ministers to express their views," Abdullah said. "This will not compromise the government's position."
The premier refused to discuss his plan to transfer power to his deputy Najib Razak in mid-2010, which both Najib and influential trade minister Muhyiddin Yassin have now questioned.
The opposition has said Najib and Muhyiddin may be preparing to challenge Abdullah and install themselves as the new premier and deputy.
The political uncertainty has paralysed investment in recent months and depressed trading on the stock market, which dropped 2.5 percent over last week and another 1.9 percent Tuesday.
Agence France-Presse - 9/16/2008 9:57 AM GMT