Campaign groups and opposition parties are organising a march on 9 July against the current system, which they say is plagued with fraud.
Police say the rally to be held in Kuala Lumpur is illegal and have warned the public against attending.
Prime Minister Najib Razak is expected to call a general election this year.
Mr Razak called on the opposition to fight him at the polls rather than on the street, brushing off allegations of electoral fraud.
"Do not create chaos just because you want power. If there is chaos, then [the organisers] will be held responsible," he said in an interview with the Star newspaper published on Sunday.
Police arrested scores of people at the weekend, stopping buses carrying activists, many of them from the Socialist Party of Malaysia (PSM), in the north and south of the country.
Many have since been released but some 31 remain in detention in northern Penang, according to PSM spokesperson Y Kohila.
The BBC's Jennifer Pak in Kuala Lumpur says the activists are demanding longer campaign periods, automatic voter registration and equality of access to the largely government-linked mainstream media.
Police have accused the detainees of carrying flyers and T-shirts advertising the demonstration that have "inflammatory slogans".
The authorities say they are trying to promote communist ideology, thereby "waging war against the king".
"Based on paraphernalia seized by police from the activists, it can be seen that they have connections with the Communist Party of Malaya ideology," said Penang's deputy police chief Abdul Rahim.
Opposition leader Anwar Ibrahim has urged police to release the activists, calling the communist allegation a "flimsy pretext".
Human rights groups said the arrests appeared to be pre-emptive.
"The police campaign appears to be aimed more at intimidation, apparently on the misconceived basis that this is a legitimate means to preserving public order," said rights lawyer Malik Imtiaz Sarwar.
PSM leaders said the allegations were "ridiculous and far-fetched".
The police launched a crackdown after a similar demonstration in 2007.
Analysts say that protest helped the opposition win an unprecedented number of seats in the last general election.
This time though, pro-government groups have pledged to counter the demonstrations planned for next month, setting the stage for potential confrontation, our correspondent says.
More than 30 Malaysian activists remain in detention, after being arrested at the weekend weeks before a planned mass rally calling for electoral reforms.