* Election date expected next week
* PM Najib Razak faces tough election, needs big victory
* Former PM Mahathir Mohamad warns of 'dirty election'
* Malaysia faces most unpredictable poll-analyst (Recasts, adds comments from Mahathir Mohamad and an analyst)
KUALA LUMPUR, April 6 (Reuters) - Malaysia's Prime Minister Najib Razak announced the dissolution of parliament on Friday, paving the way for a tough election where the embattled leader will face off against his old mentor and the country's most seasoned campaigner Mahathir Mohamad.
Najib, 64, burdened by a multi-billion dollar scandal linked to a state fund, is under pressure to deliver an emphatic win for his Barisan Nasional (BN) coalition as he struggles to appease Malaysians unhappy with rising costs and blunt the challenge from the charismatic 92-year-old Mahathir.
Najib is expected to retain power due to a deep rift in opposition ranks between Mahathir's bloc and the Pan-Malaysian Islamic Party, but analysts predict a tough fight from Mahathir, who transformed Malaysia into an industrial nation from a rural backwater during his iron-fisted 22-year rule until 2003.
Najib's opponents say the election will be unfair. In the lead up to the polls, the parliament approved plans to redraw electoral boundaries and passed a contentious anti-fake news bill, changes his opponents claim favour Najib and his ruling allies. The government rejects the charge.
"The king has permitted for parliament to be dissolved effective Saturday, April 7," Najib said in a special announcement on the state TV broadcaster on Friday.
"If victory is given to BN, we promise to do our best, to carry out a bigger, more inclusive and more comprehensive transformation of the country," Najib said.
Polling must be held within 60 days from the dissolution of parliament. The Election Commission is expected to meet within the week to announce a date for the vote.
Najib's announcement comes on the back of robust growth for Malaysia, buoyed by a recovery in global crude oil prices and increased trade and infrastructure investment from Malaysia's largest trading partner, China.
A general election was widely expected to be called last year, but Najib held off, apparently to allow time for the introduction of budgetary reforms aimed at lower income families and rural voters -- a key supporter bloc for his coalition.
Mahathir, who was himself criticised for his authoritarian premiership, said at a press conference after the announcement that this would be a "dirty election".
"Should Najib win this election through his tricks and his cheating, then we can kiss goodbye to democracy in the 15th, 16th, 17th elections," Mahathir told reporters.
Najib resisted demands to step down in mid-2015 following reports of financial mismanagement at state fund 1Malaysia Development Berhad (1MDB), including that $681 million was deposited into his personal bank account.
Najib has denied any wrongdoing with 1MDB, but the scandal created a rift between Najib and Mahathir, who has become the prime minister's harshest critic.
With the common goal of taking down Najib, Mahathir has joined hands with his former deputy and jailed opposition leader, Anwar Ibrahim, ending a bitter feud that had shaped the country's political narrative over two decades.
Najib's United Malay National Organisation (UMNO) party heads the ruling coalition that has held power since Malaysia's independence in 1957.
The coalition lost the popular vote in the last election, in 2013, but Najib held on to power with a smaller majority in parliament. Malaysia has a first-past-the-post election system, which is based on the number of seats won, not the popular vote.
Even if Najib's coalition retains power, a weak victory could lead to an internal leadership challenge against him.
His predecessor, Abdullah Ahmad Badawi, had to step down after the coalition lost its two-thirds majority in the 222-seat parliament for the first time in 2008.
"He wants not only to win, but to win big," said Yang Razali Kassim, Senior Fellow at S. Rajaratnam School of International Studies (RSIS) in Singapore.
But he warned that this election could be a close call.
"This will in fact be the most unpredictable general election in Malaysian politics," he said.
(Additional reporting by A.Ananthalakshmi, Emily Chow and Liz Lee; Editing by Praveen Menon and Michael Perry)