MCA and MIC have said they are "moving on" and "exploring a new alliance".
They said this was following Umno's "continued silence" on racial remarks by its leaders and also by BN secretary-general Nazri Abdul Aziz.
"MCA and MIC are, therefore, left with no choice but to move on to explore a new alliance to reflect the true intentions of unity in diversity in its original intent," the two parties said in a joint statement today.
The statement was signed by MCA president Wee Ka Siong and MIC president SA Vigneswaran.
The two did not explicitly say they would be leaving BN.
A high ranking leader close to MCA and MIC's negotiations, told Malaysiakini they are exploring the option of kicking Umno out of BN.
MCA at its general assembly last year, passed a resolution to move a motion to dissolve BN.
However, the BN supreme council has yet to hold a formal meeting.
Tensions between MCA and Umno had been simmering after the former called for Nazri to be sacked as BN secretary-general, after the latter was alleged to have called for Chinese and Tamil schools to be closed.
Nazri had denied wanting vernacular schools to be closed, and accused the media of misquoting him.
MIC top leaders had shown no indication of a rift with BN.
On Saturday, MIC deputy president M Saravanan was among the BN leaders on stage celebrating their victory in Semenyih.
However, yesterday, MIC central working committee member P Punithan questioned the position of his party and MCA as official component parties of BN.
This was also in light of BN's victory in the Semenyih by-election, which has been attributed to the close cooperation between Umno and PAS.
"The present MIC leadership should realise that the time has come for us to reconsider our position and the party's direction in BN," he said. - Mkini
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