Opposition and human rights groups condemned authorities for attempting to suppress the biggest political rally in a decade with tear gas, water cannons and arrests.
The Bersih organisers also said that at least seven people were beaten and kicked by police and that some needed hospital treatment including one man whose leg was broken.
Prime Minister Abdullah Ahmad Badawi had vowed to shut down Saturday's rally, held to campaign for electoral reforms as the nation heads for polls expected to be held early next year.
Police locked down the centre of Kuala Lumpur, throwing up roadblocks, searching vehicles and shutting demonstrators out of Dataran Merdeka where they had planned to gather.
Despite the tactics and the use of tear gas and water cannons at one of the rallying points, 40,000 protesters marched to the royal palace where they were briefly addressed by dissident former deputy premier Anwar Ibrahim.
"Malaysians have spoken loud and clear," said parliamentary opposition leader Lim Kit Siang (right), part of an alliance of political parties and civil society groups which mounted the rally.
Lim ridiculed the police chief for claiming that only 4,000 people attended the rally and criticised the government for what he said was an order to the media not to cover the event.
"No newspaper dared to publish photographs of the mammoth peaceful gathering, which was a tribute to Malaysians for their love of peace and commitment to democracy," he said.
Sunday's newspapers instead ran photos of the traffic jams that the roadblocks generated.
"Abdullah should honour his pledge when he became prime minister four years ago to listen to the truth from the people, however unpleasant, and to introduce institutional reforms for justice and democracy," Lim said.
Police bloated number of arrests
Leading human rights group Suaram said that up to 40 people were arrested, far from the figure of 245 given by police.
"They are trying to portray an image of the gathering being unruly and chaotic and that's why they had to arrest 245 people, which is not true at all," said Suaram executive director Yap Swee Seng (right).
"Seven people were injured by the police and one suffered a severe injury," he added. "One person said he was handcuffed and had already fallen to the ground when he was kicked in the head."
Protests are rare in Malaysia, and the last major rallies were seen in 1998 during the "Reformasi" or "Reform" movement that erupted when Anwar was sacked and thrown in jail on sodomy and corruption charges.
The sodomy conviction has been overturned but the corruption verdict stands, barring him from standing for public office until April 2008.
Bersih, a coalition of 70 political parties and NGOs, is calling for a reform of the electoral process including a review of the electoral roll, curbs on postal voting, which they say is being abused, and equal access to state media for all competing parties.
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