Malaysia's Mahathir Mohamad lost a power struggle on Saturday with a little-known ex-interior minister named as the country's new prime minister in a surprise twist that returns a scandal-plagued party to power.

Muhyiddin Yassin will be sworn in as the country's new prime minister on Sunday, royal officials said, after a week of turmoil that followed the collapse of a reformist government and Mahathir's resignation as premier.

“The process to appoint the prime minister cannot be delayed because the country needs a government for the well-being of the people and the nation,” the palace statement said. The king appoints the country's premier.

As well as ending the premiership of Mahathir, at 94 the world's oldest leader, it also means there will be little hope of his designated successor Anwar Ibrahim becoming prime minister.

The crisis began when Mahathir and Anwar's ruling “Pact of Hope” alliance, which stormed to a historic victory in 2018 against a corrupt administration, collapsed a week ago.

Malaysian leader Mahathir Mohamad had earlier indicated that he will reconcile with the former ruling alliance he led with rival Anwar Ibrahim in an about-turn that follows a week of political turmoil that followed his resignation as prime minister.

Mahathir had said he met with leaders from Anwar’s Alliance of Hope early on Saturday and was "now confident that I have the numbers needed to garner majority support" in parliament to return as prime minister for a third time.

"I am therefore prepared to stand as a prospective candidate for prime minister," Mahathir had said. The decision will be conveyed to the king, he had added.

Mahathir had not made clear in the statement if he was restoring the former alliance, which won a stunning victory in May 2018 elections. That victory ousted a ruling coalition, once led by Mahathir, that had governed Malaysia since independence in 1957 but had become entangled in a widespread corruption scandal.

The unlikely alliance between Mahathir and Anwar, longtime rivals, had crumbled on Monday after Mahathir’s Bersatu party quit in a bid to form a new government with several opposition parties. Mahathir had resigned in protest of the plan, which would have required him to work with the governing alliance he ousted in the 2018 polls.

The Alliance of Hope had initially nominated Anwar as the next prime minister but had reversed the decision on Saturday to support Mahathir’s candidacy. It had condemned efforts to form a "backdoor government involving kleptocrats and traitors".

"For the sake of defending the struggle, the Alliance of Hope expresses its full support for Mahathir Mohamad as prime minister," it had said.

The move was believed to be aimed at countering plans by Bersatu to revive its bid to build an ethnic Malay-centric government after the party on Friday backed its president Muhyiddin Yassin, instead of Mahathir, to become prime minister.

Muhyiddin is seen as a more acceptable candidate as he was willing to work with the United Malays National Organisation, where several leaders including ex-prime minister Najib Razak are on trial for corruption charges.

UMNO and its allies, including a fundamentalist Islamic party with strong rural support, have thrown their support behind Muhyiddin, putting him as a frontrunner in the battle for power. Much depends on two parties on Borneo island, that holds a bloc of votes.

Muhyiddin, 72, is a seasoned politician who was sacked by Najib as deputy prime minister in 2015 after he criticized Najib’s handling of a massive graft scandal at the 1MDB state investment fund.

He helped Mahathir in 2016 form Bersatu, which later teamed up with Anwar’s Alliance of Hope with a pact that Mahathir would eventually hand over power to Anwar. It is unclear if Mahathir will stick to that transition pact if he succeeds in another comeback.

After Mahathir resigned, the king dissolved the Cabinet and reappointed Mahathir as interim leader. The monarch then individually interviewed all 222 lawmakers but failed to establish a candidate with majority support.

Rather than holding a parliamentary vote to elect a prime minister, the king normally appoints a nominated candidate if he is satisfied they have the majority of support.