Mitchell said he had proposed the idea to the FAM after being given the authority to do so by an unnamed A-League consortium and was awaiting their verdict.
"While they agreed it would be difficult for FAM to send a team to the A-League because of the duration and also to assemble the national team for fulltime, they said there are other ways to go round the problem," Mitchell told the MalayMail.
"Without doubt the possibility of playing in the A-League will help uplift Malaysian football and also give it a new dimension to football in the country."
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Both the FAM and Football Federation Australia, the governing body for soccer in Australia, were unavailable on Saturday to comment on the report.
Mitchell, who played and managed in Malaysia before retiring, said he was also under instruction from the consortium to discuss the idea with clubs in Thailand and also Indonesia.
Indonesia are currently serving a FIFA ban for government interference.
The Scottish-born striker also suggested a Malaysian consortium could buy an A-League club for A$6 million ($4.26 million), fill the team with local players and base themselves in Kuala Lumpur.
He dismissed concerns about travel times and said the benefits of joining the 10-team Australian league were many fold for the Malaysians, who ended a four-year agreement last year to have a youth side compete in the Singapore league.
"In fact, it’s faster to travel to Malaysia than some parts in Australia," the former Chelsea, Feyenoord and Sydney Olympic player said.
"Cost-wise it will not be an issue as a substantial subsidy is given to participating teams besides travel also taken care of by the Football Federation of Australia.
"The Malaysian team travelling to Australia can play two matches in a trip.
"Besides the benefit of the development of the game it will be a tourism boost for both countries as supporters will travel with the team. Crowds at the stadium is also expected to be at a maximum."
($1 = 1.4090 Australian dollars)
(Writing by Patrick Johnston in Singapore; Editing by Ian Ransom)
