The Australian Broadcasting Corporation journalist and camera operator were detained overnight Saturday after approaching Najib as he visited a mosque in Kuching on Borneo island.
They have since been released but remain barred from leaving Malaysia as they await possible charges, their lawyer said.
Foreign Minister Julie Bishop said Australia’s high commissioner (ambassador) in Malaysia had been in contact with the pair, Four Corners reporter Linton Besser and camera operator Louie Eroglu.
“I’m always concerned when there are instances of a crackdown on freedom of speech — in democracies particularly,” Bishop said while visiting Fiji.
“I’m also concerned about the freedom that journalists have to carry out their work.”
The ABC said the men were arrested on Saturday night as they approached the prime minister, with Besser asking him why hundreds of millions of dollars had been deposited in his bank account.
According to a Malaysian police statement, the pair were detained after they crossed a “security line and aggressively tried to approach the prime minister”.
“Both of them were subsequently arrested for failing to comply with police instructions not to cross the security line,” it said.
But the ABC’s director of news Gaven Morris said the journalists did not “obstruct or intend to obstruct any public servants in performance of their duties”.
“They did not see a police line and do not believe they crossed one,” he said.
Najib, 62, has been under fire in recent months, including over allegations that billions of dollars were stolen from a state firm he founded, and over his own acceptance of a murky $681 million overseas payment.
Najib and the state firm have vehemently denied any wrongdoing but he has curbed investigations into the scandals and purged his ruling United Malays National Organisation of critics.
Media outlets reporting on the allegations have been muzzled and whistle-blowers arrested, raising concerns over rights and freedom of speech.