The men, aged 25 to 29, stripped off their clothes at the track at Sepang, near Kuala Lumpur's international airport, about 5pm on Sunday.

Apparently celebrating the win of fellow Australian Daniel Ricciardo, the group chanted "Aussie Aussie Aussie, oi oi oi" for several minutes and wrapped themselves in Australian flags as they stood in the middle of a crowd.

They then poured beer into their shoes and drank from them, before posing for photos with fellow spectators.

Dean Gillespie, from Balmain, said the spectacle unfolded about 10 minutes after Ricciardo also drank from a shoe, when fans were walking down pit straight.

"There was a fantastic atmosphere, everyone was walking up pit straight and suddenly there was this big cheer," Mr Gillespie said. "They stripped off in front of us. Everyone nearby stopped and sort of watched."

Mr Gillespie said nobody in the immediate vicinity appeared to be offended, with many laughing and filming.

"It clearly wasn't spontaneous, because they had all dressed up as they did in the flags, but it just felt like they were a group of lads that were having a bit of a party," he said.

"I don't think they were offending anyone other than being inappropriate towards the flag."

The group were arrested soon afterwards, after officials and some onlookers reportedly took offence.

The government-controlled New Straits Times newspaper reported that opinion was divided on the behaviour, saying some people thought it humorous while others saw it as insulting and disrespectful to local culture.

"Shame on those Aussies doing this. So inappropriate," tweeted Nik Asyraaf.

Sepang district police chief Abdul Aziz Ali said the men would be held in jail for at least four days while further action against them is considered.

He told reporters they are being investigated for breaching the peace, public indecency and disrespecting the national flag.

If charges are not laid the men will almost certainly be deported from the country after spending days in jail.

While Malaysian media believed the group's attire to be underwear, it appears to be the tight-fitting swimwear colloquially known as "budgie smugglers".

Malaysia is a Muslim-majority country of 30 million where authorities take a dim view of acts of nudity by foreigners.

Last year 10 foreigners were accused of desecrating a holy site after they posted a photo of themselves posing nude atop Malaysia's Mount Kinabalu.

Passions were inflamed further over the act when days later a 5.9 earthquake struck the mountain, killing at least 16 people and trapping scores of climbers.

Superstitious local officials accused the nudists of causing the quake.

A spokeswoman for the Department of Foreign Affairs and Trade (DFAT) said assistance is being provided to the men.

"The Department of Foreign Affairs and Trade is providing consular assistance, in accordance with the Consular Services Charter, to a group of Australians who were arrested in Malaysia," the spokeswoman said.

"Due to privacy obligations, we are unable to provide further information."

Do you know more? Email scoop@smh.com.au

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