Najib, who is widely expected to call snap polls within months, also outlined a range of tax incentives in finance, tourism and other areas aimed at spurring domestic demand to ward off a feared export slowdown.
The prime minister told Parliament that the cash handouts would include a one-off payment of 500 ringgit (US$158) to lower-income families and bonuses for the country's 1.3 million civil servants equal to half their monthly salaries.
He called the 1.8 billion ringgit in payments to the poor "an unprecedented measure" to help lower-income segments of society cope with rising world prices of food, fuels and other essentials.
The Budget is likely the last before Najib calls pivotal parliamentary elections.
A once-insignificant opposition scored unprecedented gains in 2008 polls that saw the long-ruling Barisan Nasional coalition lose its two-thirds parliamentary majority for the first time, and Najib has battled lately to win back voters.
"In an environment of global uncertainties, the strong support of the people is mandatory for us to become developed and prosper as a nation," he told Parliament.
With inflation around two-year highs of 3.3 percent in August cost-of-living concerns loom large with voters and Najib zeroed in on those fears.
His Budget said the government would "maintain" a subsidies programme on key commodities that it had previously moved to scale back in a deficit-reduction drive.
The cuts in subsidies on fuel and sugar caused prices of those items to spike and had a knock-on effect on costs of transport and other essential commodities that had already risen along with surging world prices.
The inflation fears have been compounded by concern that the export sector -- the economy's driving force -- could be hit by the credit crisis in Europe and lingering US economic problems.
Economic growth has slowed from 7.2 percent in 2010 to 4.0 percent in the second quarter of this year.
Najib's Budget maintains its earlier rough estimates of 5.0-5.5 percent growth for full-year 2011 and 5.0-6.0 percent in 2012.
Independent analysts have previously said both forecasts were optimistic.
The Budget acknowledged Southeast Asia's third-largest economy faces increased challenges due to the external environment, and forecast export growth of 6.8 percent in 2011 and 6.0 percent next year.
Growth had surged by 15.6 percent in 2010.
Despite the government handouts and tax breaks, the Budget forecasts a 4.7 percent Budget deficit in 2012, down from the 5.4 percent target for 2011.
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