He won a landslide victory in a United Democratic Front (UDF) convention over the country's Vice President Cassim Chilumpha. The results were read out on Muluzi's Joy radio.

Muluzi is likely to face incumbent President Bingu wa Mutharika, whose economic reforms have won praise from Western donors.

Muluzi won the impoverished southern African nation's first multi-party elections in 1994. He stepped down in 2004 after unsuccessfully trying to change the constitution.

It is not clear whether the former Malawi leader will be free to run again under the constitution, which limits the president to two terms but says nothing about whether the restriction applies to former rulers.

Muluzi was hailed a hero in Malawi for ousting Kamuzu Banda, a victory that appeared to mark the end of authoritarian rule in the country of 13 million people.

But a decade later he was defeated in an unsuccessful bid for an unconstitutional third, five-year term amid growing tensions with Western donors who account for a large chunk of the country's finances.

The former president remains popular among the middle class and parliament and is likely to pose a stiff challenge to wa Mutharika in presidential and parliamentary elections in May 2009.

But he is tainted by corruption charges.

Malawi's Anti-Corruption Bureau (ACB) said in March it plans to prosecute Muluzi over $11 million in donor money it says was siphoned into his private account. He denies any wrongdoing.

The anti-graft body briefly arrested Muluzi in 2006 on 42 counts of corruption. But all the charges, except for one involving $11 million, were dropped for lack of evidence.

Wa Mutharika, who quit the UDF after winning the 2004 poll and formed the Democratic Progressive Party (DPP), is likely to stress his economic achievements in his re-election bid.

Inflation and interest rates have fallen and harvests have been generally good under his rule. Muluzi says prosperity has not trickled down to many Malawians.

The government has forecast 8 percent growth this year, slightly higher than the International Monetary Fund's projection of 7.7 percent.

Tobacco accounts for about 15 percent of the economy of Malawi, one of the world's poorest nations, and about 60 percent of its foreign-currency earnings. Malawi is one of the world's top 10 producers of tobacco.

A standoff between wa Mutharika and opposition lawmakers, including UDF members, has sparked a series of political crises that have threatened to derail the international donor programmes.