Now, they must beat India and Pakistan in their next matches to secure a third-fourth classification match, the least.
"A good fightback but individual mistakes crept in and we let in two early goals. However, I am proud of my players as they tried to make a comaback, but time was not on their side," said Malaysian coach Arul Selvaraj.
"Against India tomorrow (today) my personal target is to gain another set of experience, and try and reduce the cards as we need the numbers on the field consistently," said Arul.
Britain were so great that they never let Malaysia settle down by scoring two quick field goals in the first five minutes of play.
The damage was inflicted by James Boon in the third minute, and it was followed by another field goal by David Goodfield in the fifth minute.
It was supposed to be an uphill battle against the tournament favourites, but Malaysia folded and crumbled too early and only started playing hockey 10 minutes into the match.
The same old mistakes that the players commited against New Zealand crept into the Malaysian game, and the score stood 2-0 at the breather.
Skipper Haziq Samsul injected some hope into his team-mates with a darting run in the first minute of the second half, and his pass saw Mohamed Rohulamin slapping in past Britain's goalkeeper Harry Gibson, who was beaten for the first time in this tournament.
However, the fire was doused by Luke Taylor in a 63rd minute penalty corner attempt which made the score 3-1.
Shahril Saabah re-ignited the fire a minute later when he scored a sizzling penalty corner drag flick to narrow the gap to 2-3 in the 64th minute, but the Brits ran down the clock and walked away with full points.
India hit a sixer past Pakistan, and coach Harindra is now looking for a similar performance against Malaysia today.
"This is a junior tournament and my players have been improving slowly in some of the departments, and we hope to carry this momentum into our next match (against Malaysia)," said India coach Harendra Singh.
And his take on the hosts thus far: "Malaysia are a good side and with home support I think it will be an exciting match. However, as these are junior players they need to be let loose to sind their identity and there should not be rigid play," said HArendra.
Australia staged a super fightback when they came back from three goals down to beat New Zealand 4-3 to take a step closer to playing in the final.
It was a display of clinical finishing and tremendous team spirit that saw the Aussies come back from the dead: "We had to make changes in strategy to save the match and more importantly, a situation like this will help boost the players development, which is what we are here for," said Australian coach Ben Bishop.
After clawing back to 3-3, the match winner was delivered by 16-year-old Max Hendry from an acute angle.
RESULTS: Australia 4 New Zealand 3; India 6 Pakistan 0; Malaysia 2 Great Britain 3.
TODAY: New Zealand v Pakistan (4pm); Malaysia v India (6pm); Britain v Australia (8pm).
P W D L F A Pts
G BRITAIN 3 3 0 0 10 2 9
AUSTRALIA 3 2 1 0 7 5 7
INDIA 3 2 0 1 8 3 6
N ZEALAND 3 0 1 2 5 7 1
MALAYSIA 3 0 1 2 4 6 1
PAKISTAN 3 0 1 2 1 12 1