The alleged spiritual leader of the militant group widely linked to the Bali bombings has warned that Australia would be "destroyed instantly" if it launched pre-emptive strikes overseas, the Sydney Morning Herald has reported.

The newspaper said Abu Bakar Ba'asyir, the suspected head of Jemaah Islamiah, gave the warning in answers to questions put by the paper this week.

In Islam there are no words for 'hands up', there are no words for 'surrender' Abu Bakar Ba'asyir

The radical Islamic cleric said Australia would be dragged into a war with Muslims if they supported the "crazy idea" of pre-emptive strikes, as suggested by Australian Prime Minister John Howard earlier this month.

Mr Howard caused outcry across Asia when he said he was prepared to strike against militants in the region, if he knew they were planning to attack Australia.

On Friday Mr Howard received a blow in his anti-terror policy when opposition parties blocked tough new laws in parliament's upper house.

The legislation sought to increase the powers of Australia's security agency, the ASIO, but opposition MPs said it would have infringed civil liberties. The bill had proposed that suspects as young as 14 could have been detained for up to 48 hours without access to a lawyer.

Radical cleric

Responding to the prime minister's idea of pre-emptive strikes, Mr Ba'asyir has reportedly said:

Wanted: Key Bali suspect Hambali

"If John Howard's stance is followed by the people of Australia you must know that there will be a war in the world, and, God willing, Australia will be destroyed instantly due to the crazy idea of its prime minister."

Mr Ba'asyir is being detained in hospital in Jakarta accused of a series of church bombings in Indonesia during Christmas 2000.

The cleric, who heads a Muslim boarding school in Central Java, also told the newspaper that suicide bombings were a "noble thing" when used in the defence of Islam.

"In Islam there are no words for 'hands up', there are no words for 'surrender'. There are only two things, win or die," he reportedly said.

His comments were recorded by an intermediary who put to him written questions from the newspaper.

Bali investigation

Mr Ba'asyir has not been named a suspect in the Bali bombs, but investigators believe his group was involved. Several foreign governments and some Indonesian officials have linked Jemaah Islamiah to Osama Bin Laden's al-Qaeda network.

Nearly 200 people were killed in the Bali attacks, including 88 Australians.

Three key suspects are among more than 15 people arrested over the attacks. They are:

Mukhlas, alias Ali Gufron, the alleged operations chief of regional terror group Jemaah Islamiah

Imam Samudra, who is believed to have masterminded the bombing

Amrozi, a younger brother of Mukhlas, who is said to have provided the van used in the blast

Another top suspect, Hambali, who is wanted in a string of attacks across the region, remains at large. Indonesian police have said he was Jemaah Islamiah's operations chief until he was recently replaced by Mukhlas.

Thailand on Thursday acknowledged for the first time that Hambali had briefly visited Thailand and that local security forces has missed capturing him "by a whisker".

Hambali, whose real name is Riduan Isamuddin, was in the south of the country "over a period of days," said Krit Garnchana-Goonchorn, the deputy permanent secretary of the Foreign Ministry.

He refused to say when Hambali was in Thailand, but he said he left the country through Satun, a town on the border with Malaysia.

McDonald's blast

In Indonesia, police on the island of Sulawesi on Friday said a man suspected of involvement in last week's bombing at a McDonald's restaurant had surrendered.

The local police chief, General Firman Gani, said the suspect, Kahar Mustafa, gave himself up to police in the town of Sinjai, 1,230 kilometres (750 miles) from Makassar where the attack took place.

The blast killed three people, including one of the bombers.

General Gani said Mr Mustafa had been named by other suspects, now under arrest, as the supplier of detonators for the bomb.

Police have said the Sulawesi suspects and the Bali suspects knew each other. They are looking into possible links between the two attacks.