Malaysia will send up to 3000 tonnes of plastic waste back to the countries it came from, the environment minister said, including back to Australia.
The country became the world's main for plastic waste last year after China banned its import, disrupting the flow of more than seven million tonnes per year.
Dozens of recycling factories have cropped up in Malaysia, many without operating licences, and communities have complained of environmental problems.
Malaysian officials have identified at least 14 origin countries, including the United States, Australia, Japan, France, Canada and Britain, for its unwanted waste.