(Recasts with government statement)
KUALA LUMPUR, Feb 16 (Reuters) - Malaysian authorities will deport an Australian senator after refusing him entry on Saturday over what it said was his participation in an illegal street rally for electoral reform in the Southeast Asian country last year.
The deportation of Senator Nick Xenophon is a sign of growing political sensitivity in Malaysia as the government braces for elections within months that are expected to be the closest in the former British colony's history.
Xenophon said he had been detained upon arrival in Kuala Lumpur early on Saturday and refused entry because he was considered a "security risk" ahead of a visit to discuss an election with government and opposition officials.
"I was told I am a security risk and I can't be allowed into the country," Xenophon told Reuters. He said airport officials told him arrangements were being made for him to leave Malaysia on the next available flight.
"It is bizarre and extraordinary," Xenophon said.
Australian Foreign Minister Bob Carr said Australian officials were seeking Xenophon's immediate release and had raised the issue with the Malaysian government, calling it "a surprising and disappointing act".
The Malaysian government said the senator had been denied entry for breaking the law on a previous visit.
Xenophon was invited to Malaysia last year by opposition leader Anwar Ibrahim and observed a major street rally for electoral reform in April that ended in violence. He later criticised the government's handling of the rally and what he described as biased coverage by state media.
"Malaysia is a free and democratic country, but no one is above the law," Alias Ahmad, director-general of Malaysia's immigration department, said in a government statement.
Australia and Malaysia have had a sometimes rocky diplomatic relationship. The two countries clashed 20 years ago when former Australian Prime Minister Paul Keating called former Malaysian leader Mahathir Mohamad "recalcitrant" for boycotting the 1993 Asia-Pacific economic forum.
Xenophon said he had travelled to Malaysia to meet several parties, including Anwar, officials from the prime minister's department, the elections commission and the judiciary.
He said he had received a letter from Anwar, Malaysia's former deputy prime minister, last year that outlined concerns about the election and called for independent observers.
Prime Minister Najib Razak must call the election by the end of April. The poll is set to be the closest in Malaysia's history, with the opposition holding a chance of toppling the United Malays National Organisation after 56 years in power.
That prospect is unnerving some government officials, emboldening the opposition and raising risks for investors.
Xenophon said other members of an Australian delegation had cancelled their trip after he was refused entry. (Reporting By Anuradha Raghu; Editing by Stuart Grudgings and Ron Popeski)