KUALA LUMPUR (Reuters) - Former Malaysian Prime Minister Mahathir Mohamad on Thursday announced plans for a new party that would join an opposition alliance in a bid to oust the ruling Barisan Nasional (BN) coalition led by scandal-tainted Prime Minister Najib Razak.

Speculation had been rife over the past week that Mahathir, 91, Malaysia's longest serving prime minister, was planning to start a party with three other former leaders of the United Malay National Organisation (UMNO) which Najib now leads.

"We who oppose Najib cannot achieve victory unless we work together as a coalition," said Mahathir.

He added that he would not contest the next general election, due to be held in 2018, or position himself as a candidate for prime minister.

Mahathir has been critical of Najib's handling of the 1MDB state fund scandal and called on him to resign.

Mahathir was coy when asked if the three former UMNO leaders - Muhyiddin Yassin, Mukhriz Mahathir and Shafie Apdal - would join him in the new party, just saying that he was "very open" to the idea.

Mahathir said he and colleagues had yet to decide if the new party would represent the Malay-Muslim majority or eschew racial lines. He also did not give a time frame for when the party will be formed.

Last month, Najib announced the UMNO's supreme council's decision to sack Muhyiddin, who was then deputy president, and Mahathir's son, former Kedah Chief Minister Mukhriz, from the party.

Both have been tough critics of Najib, calling for his resignation following allegations of graft and mismanagement at 1MDB.

UMNO vice-president Shafie later quit the party in protest against his suspension pending an investigation into his conduct in questioning Najib's handling of 1MDB.

In February this year, Mahathir quit UMNO, saying it was seen as "supporting corruption" under Najib's leadership.

The Wall Street Journal has reported that global investigators believed more than $1 billion entered Najib's personal bank accounts, much of it from 1MDB. None of the information publicly disclosed about the 1MDB investigations across the world has shown any connection between alleged misappropriation of money linked to 1MDB and the prime minister.

Najib has denied any wrongdoing and Attorney-General Mohamed Apandi Ali cleared Najib in January of any corruption or criminal offences. He said that $681 million, deposited into Najib's personal account in March 2013 before a general election, was a gift from a member of Saudi Arabia's royal family and most of it was returned.

Barisan Nasional coasted to victory in two by-elections earlier this month.

(This story has been refiled to correct Mahathir's age to 91 in paragraph 2)

(Reporting by Joseph Sipalan; Editing by Nick Macfie)