By Jonathan Kent BBC correspondent in Kuala Lumpur

The leaders' smiles contrasted with the frostiness of recent contacts

They also vowed to address the problem of poverty in the surrounding area.

Malaysia had rejected suggestions by Thai PM Thaksin Shinawatra that Muslim separatists thought to be behind the violence could be inside Malaysia.

There are concerns that dozens of unofficial border crossings are not being properly monitored.

Both leaders were keen to emphasise the cordial nature of the talks and their desire to co-operate.

The Malaysian Prime Minister, Abdullah Badawi, said the situation in southern Thailand was a matter of serious concern, and that he and his Thai counterpart stood together against terrorists, criminals and drug traffickers.

However, in an echo of his domestic agenda, he said that the troubles in Thailand's Muslim majority provinces were rooted in poverty.

The Thai leader, Thaksin Shinawatra, agreed with Mr Abdullah's analysis, and said the two countries would continue to work on a joint strategy to bring development to their border area.

The largely ethnic Malay Muslim south has missed out on the economic growth enjoyed by most of Thailand and by neighbouring Malaysia.

Monday's meeting follows frosty exchanges between the two countries after Mr Thaksin suggested that militant Islamic separatists thought to be behind the violence had found shelter in Malaysia. The frontier has a reputation for being poorly policed.

Meanwhile, Malaysian army sources say five of their soldiers detained by the Thai military on Thursday after becoming lost in the jungle will be returned on Monday.