In Terengganu, it was the first conviction for same-sex relations and the first time a caning had been carried out in public in the state, Satiful Bahri Mamat, a member of the Terengganu state executive council told Reuters.
The two, aged 22 and 32, were each given six strokes of the cane in an Islamic law court in the conservative state of Terengganu, which is governed by the Pan-Malaysian Islamist Party.
That two women were caned while "100 people gawked at them" in the public gallery of the court was shocking and humiliating, he said.
Malaysia has a dual track legal system where sharia courts can handle religious and family matters.
Last month they pleaded guilty to attempting lesbian sex and were fined and sentenced to six lashings of the cane.
Lee also spoke out generally on Malaysia's use of caning, stating it "must end the use of caning and repeal the laws that impose these torturous punishments completely".
Charles Santiago, a lawmaker who is part of the governing coalition, said the punishment was "outrageous" and "a form of torture".
The Justice for Sisters activist said the group was concerned the case would set a risky precedent for the increased policing of morality and sexual identities in Malaysia.
The caning, originally scheduled for August 28, but was postponed to Monday due to technical reasons, the Chief Registrar of the court, Wan Wan-Sidek, said as he defended the public caning.
A witness to the caning, Thilaga Sulathireh of the group Justice for Sisters, blasted the punishment as torture.
"This case shows a regression for human rights", she said, "Not only for LGBT people but all persons because corporal punishment affects all people".
Rights groups assailed the new government for discrimination against gay men and lesbians and for continuing to allow a form of corporal punishment outlawed in most of the world.
It reads: "Homosexual acts are illegal in Malaysia and punishable under federal law, and in some states, shari'a law".
The public nature of the caning has been criticised, including by Umno's Rembau MP Khairy Jamaluddin, who said it should not have been done publicly as Islamic teachings are that the dignity of each person should be looked after.
"Sexual acts between two consenting adults should not be criminalised, let alone punished with whipping". Just a week earlier, Malaysia's religious affairs minister ordered the removal of portraits of LGBT activists from an arts festival in Penang, telling reporters, "We do not support the promotion of LGBT culture in Malaysia".