Anwar was once a deputy prime minister in the ruling Barisan Nasional (BN) coalition but was sacked and jailed a decade ago on sex and corruption charges seen as politically motivated.
He is now back in the legislature, but a parliamentary disciplinary committee recommended he be suspended for six months in a decision Anwar's party said showed the government was worried about the electoral "threat" he posed.
The suspension, which has to be approved by the full house, where the government has a large majority, would run beyond the time when most pundits expect a general election to be called, even though one is not due until 2013.
At the last polls in 2008 the opposition made unprecedented gains, depriving the BN of a two-thirds majority for the first time in almost 40 years.
Anwar is currently on trial over new allegations of illicit relations with a young male aide, which he denies, saying the charges are a conspiracy designed to end his career as the leader of a reinvigorated opposition.
The parliamentary ruling against him centres on his criticism of the government's "One Malaysia" national unity slogan, which he said had been copied from the "One Israel" political alliance of former Israeli prime minister Ehud Barak in 1999.
Malaysian Prime Minister Najib Razak, who came to power last year, has been trying to reach out to Chinese and Indian minorities -- who deserted the government in the last national polls -- under the "One Malaysia" initiative.
Muslim-majority Malaysia has no diplomatic relations with Israel and is a supporter of a Palestinian state.
Malaysian MPs have a right to freedom of speech in parliament but in April the government pushed through a motion in the house to refer Anwar's comments to the disciplinary committee.
"The committee has agreed that the statement made by the honourable Permatang Pauh MP is not true and he has abused his rights and privileges as an MP," the committee said in its report, referring to Anwar by his constituency.
"Therefore the committee has decided that the Permatang Pauh MP has to be suspended from his parliamentary duty for six months," it added.
It also admonished a veteran opposition MP, Karpal Singh, who quit the investigation in protest earlier this month saying the committee had made its decision without hearing Anwar's testimony.
Nazri Aziz, minister in the prime minister's office in charge of law, told AFP the parliamentary committee would seek the legislature's official endorsement of its report and recommendations on Thursday.
The suspension would see Anwar absent from parliamentary debates, but senior officials of his People's Justice Party said the move would not sideline him or affect the opposition's bid for power at the next vote.
"Again it showed the ruling coalition is hyper-sensitive and worried about Anwar," Tian Chua, the party's vice-president, told AFP.
"They feel he is a threat and whenever possible they would try to dismiss his presence," he said, adding the removal of a lawmaker because of comments made in a debate would set a bad parliamentary precedent.
