Deputy Prime Minister Najib Abdul Razak personally headed the government's campaign in Kuala Terengganu, as well as another failed by-election last year which saw Opposition Leader Anwar Ibrahim returned to Parliament after a decade-long absence.

"Of course, this is a setback for us... We will not be disheartened by the result," Najib told a press conference, rejecting the suggestion that the outcome reflected badly on him.

"It's nothing to do with that," he said.