OFFICIALS have welcomed further signs that Australia's sometimes rocky relationship with Malaysia is on the mend, with Malaysian Prime Minister Dr Mahathir Mohamad saying this week he saw no reason Australia could not become a member of his proposed East Asian Economic Caucus (EAEC). Dr Mahathir, who has been trying to establish his EAEC proposal in the face of opposition from Australia and the United States, has previously staunchly maintained that Australia could not join. But his latest comments, in an interview with The Australian, contain something of a mixed message. Although he appears to offer a hand of friendship, Dr Mahathir makes it clear he does not believe Australia has yet earned a place in the Asian club. This view is rejected by the Australian Government which believes its intensive diplomacy over the past few years - including its Cambodian and Asia Pacific Economic Co-operation (APEC) initiatives - have established its credentials. One senior Australian official said yesterday that although the comments may be more symbolic than substantive, they did indicate Dr Mahathir 'recognises the bilateral relationship has moved to a new and better plain'. Another official said it was rare for Dr Mahathir to send 'such a consistent set of positive signals'. Australia's High Commissioner to Malaysia, John Dauth, said he was 'delighted with the positive signs inherent in what Dr Mahathir has been saying'. There have been no official talks between Australia and Malaysia about Australia joining the EAEC and Australia has not indicated any desire to join. Dr Mahathir told The Australian : 'Of course, as Australia becomes more Asianised, certainly in terms of geographical relations, but also in terms of outlook, there is no reason they cannot be part of the EAEC.' But, in comments unlikely to be welcomed, he said that 'if you want to become Asian, I think you can't just say, well we are Asian because we are geographically close to Asia. 'If you are willing to accept that you are not placed there to pass judgment on others, to assume that your ways are always superior to others, I think you'll be readily accepted over time.' Australia's relationship with Malaysia took a downturn in 1991 over a fictional Australian television series about an embassy. It also suffered a setback in 1993 when Prime Minister Paul Keating said Dr Mahathir was 'recalcitrant' for failing to attend that year's APEC summit. Dr Mahathir said this week he was prepared to 'forgive and forget' the comment.