Malaysian police said they arrested 16 people involved in an "international network" of people smugglers which had been operating since 2017

Malaysia has arrested more than a dozen members of an alleged people trafficking syndicate after intercepting a ship carrying 127 Sri Lankan migrants believed to be bound for Australia and New Zealand, authorities have said.

Maritime authorities on Tuesday halted a modified tanker named "Etra" in Malaysian territorial waters off southern Johor state, national police chief Mohamad Fuzi Harun said.

Nearly 100 Sri Lankan men, 24 women and nine children were aboard the ship, which was making its way to international waters when it was stopped.

The police chief said in a statement that authorities arrested 16 people involved in an "international network" of people smugglers, including three Indonesians and four Malaysians aboard a fishing vessel used to transport the migrants from the Johor coast to the tanker.

Another four Malaysians were arrested in the nearby state capital of Johor Bahru, while a fifth was taken into custody in northern Penang state.

Four Sri Lankan men were arrested aboard the tanker for suspected involvement in the trafficking network.

Mohamad Fuzi said the remaining 127 passengers aboard the vessel had been detained for violating immigration laws, according to news reports which did not say where they were being held or if they had been allowed to disembark.

He said the international syndicate, which covered Sri Lanka, Australia, New Zealand, Indonesia and Malaysia, had been operating since the middle of last year.

Sri Lanka's foreign ministry said Sunday it was working closely with the Malaysian authorities to establish the identities of those detained.

"While the identities of the 131 persons are still in the process of being determined, initial information indicate that 43 of the 131 persons arrested hold identity cards issued by the UN Refugee Agency (UNHCR)," the ministry said.

Tens of thousands of Sri Lankans who fled decades of ethnic war are refugees in neighbouring India and other countries despite the end of the conflict in 2009.

It is relatively rare for people-smuggling boats seeking to take people to Australia to be stopped off Malaysia. Boats typically bypass Malaysia and head to neighbouring Indonesia, the traditional staging post on the route to Australia.

Over the years, many such vessels have been stopped or have sunk off Indonesia.

This flow has largely stopped in recent years however after Australia introduced tough policies in 2013 of turning back boats when it is safe to do so, an approach that angered Jakarta.

In 2015 some boats carrying Rohingya, a stateless Muslim minority from mostly Buddhist Myanmar, arrived in Malaysia after Thai authorities clamped down on regional trafficking networks and preventing them from coming ashore in Thailand.

A Rohingya boat arrival in northwest Malaysia last month was the first for some time, and came as fears mounted more might be set to take to the high seas after a military crackdown in myanmar adventure tours sent many members of the minority fleeing their homeland.

However experts have played down the potential for a mass exodus via the high seas, as stormy weather over upcoming months makes boat trips far more risky.