Malaysia has joined criticism of Australia's plan to build nuclear-powered submarines, warning it could spark a renewed arms race in the region, while the diplomatic crisis with France sparked by the decision continues to escalate.

Prime Minister Scott Morrison rang Malaysia's new Prime Minister Ismail Sabri Yaakob last week as part of a broader high-level diplomatic push designed to reassure regional leaders.

He wanted to explain Australia's rationale for scrapping a $90 billion submarine contract with the French company Naval Group in favour of nuclear submarines with US and UK technology.

But in a public statement, Mr Yaakob said he had raised concerns about the project with Mr Morrison, and warned that the nuclear submarine project might heighten military tensions in Asia.

"At the same time, it will provoke other powers to take more aggressive action in this region, especially in the South China Sea," Mr Yaakob said.

Indonesia has also criticised the nuclear submarines announcement.

A spokesman for its foreign ministry issued a statement earlier this week saying it was "deeply concerned about the continuing arms race and power projection in the region".

However, other South-East Asian countries have responded more warmly.

Singapore has raised no public objections to the announcement, while the Philippines defence ministry issued a statement saying Australia had every right to boost its defences.

Japan also welcomed the move, with Japan's Foreign Minister Toshimitsu Motegi praising the new US-UK-Australia defence pact — known as AUKUS — which will allow Washington and London to share the technology which will power the new submarines.

Several politicians in Taiwan have also vociferously welcomed Australia's announcement.

Meanwhile, the federal government is still facing an intensifying fury in France over its decision to scrap the contract with Naval Group, with the French government announcing yesterday it was withdrawing its Ambassadors to both Australia and the United States in retaliation.

The departing French Ambassador to Australia, Jean-Pierre Thebault, said the Australian government's handling of the situation was "very, very bad" and a "huge mistake".

"It wasn't a contract, it was a partnership that was supposed to be based on trust, mutual understanding and sincerity," Mr Thebault said

The ABC has been told that France will also cancel a planned trilateral meeting which was going to be held between Foreign Minister Marise Payne and her Indian and French counterparts on the sidelines of the United Nations General Assembly next week in New York.

The French government hinted it may take further action down the track to punish Australia.

Several senior French ministers have now lined up to lambast Australia, accusing the federal government of duplicity and betrayal.

France's European Affairs Minister Clement Beaune suggested the controversy might even derail free trade negotiations between Australia and the European Union.

But the European Union's top diplomat, Josep Borrell, seemed to dismiss that idea during a press conference late this week, saying the EU remained committed to building its relationship with Australia.

"Let's not mix apples and pears. We want to foster cooperation with countries such as Australia, we are not taking ad hoc action motivated by individual events," he said.

Trade Minister Dan Tehan is expected to travel to Paris in coming weeks as Australia tries to staunch the bleeding in bilateral ties.

On Friday in Washington, Senator Payne said that she understood France's disappointment about the "difficult" decision made by Australia.

"My task is to work as hard as I can with my counterpart and with senior French officials to make sure that they do understand the value we place on the role that they play, do understand the value we place on the bilateral relationship and the work we want to continue to do together," she said.