Earlier, in a televised address to the nation, Mr Samak had threatened police action against the protests which have raised fears of a military coup.

'We have been ordered by the Prime Minister not to break up the crowd tonight. He is concerned about their safety and he wants us to continue to talk to them,' national police spokesman Vatcharapol Prasanratchkij told reporters at the rally.

Several hundred riot police with shields and batons watched the peaceful 6,500-strong rally on the Makawan Rangsan Bridge near the gilded Grand Palace in the heart of Bangkok.

Mr Samak's warning had come a day after a Cabinet minister resigned in a move aimed at preventing protests similar to those against prime minister Thaksin Shinawatra before he was ousted in a 2006 coup.

'You have to clear out or the police will clear you out,' Mr Samak initially warned protesters who began their demonstrations last Sunday, when 20 people were injured in clashes between pro- and anti-government supporters in the capital.

'I will not yield to you,' he said on national television.

The Prime Minister in his speech accused the People's Alliance for Democracy (PAD), which was leading the protests, of damaging the country.

'You have broken the law. I have a duty to deal with you,' said Mr Samak, who leads a pro-Thaksin coalition government elected last December. 'You cannot stay there. I will take you out.'

But his warning fell on deaf ears as protesters refused to leave Bangkok's historic district. Two police deadlines for the demonstration to break up passed without the crowd disbanding.

As night fell, Interior Minister Chalerm Yubamrung said police would not move against the mainly middle-class crowd which appeared to be in a festive mood.

'The Prime Minister has no objective to break up any rally,' Mr Chalerm said on Channel 9 television.

The PAD had vowed last Friday to step up protests against the government, accusing it of breaking the law and damaging the country. 'What we know for sure is that if any violence occurs, it will come only from the government side, not ours,' said Mr Somsak Kosaisuk, one of five PAD leaders.

Minor scuffles between pro- and anti-Thaksin protesters last Sunday stoked fears that the army might seize the chance to storm back into the political fray, analysts said.

Thailand's top military commander, who denied reports last Thursday that the army may be plotting another coup, said he did not believe soldiers would be ordered into the streets.

'That would require a state of emergency and I don't think the Prime Minister will do that. It would make the country look bad,' General Boonsrang Niumpradit told Reuters.

Mr Jakrapob Penkair, Minister in the Prime Minister's Office, quit last Friday after he was accused by police of making offensive remarks against the revered King Bhumibol Adulyadej last year.

The saga is part of a campaign by the PAD and opposition Democrat Party to paint Mr Thaksin and his acolytes as republicans seeking to end the country's constitutional monarchy.

Stock investors reacted positively to Mr Jakrapob's resignation, with the main index closing up 0.4 per cent last Friday after four days of falls due to political uncertainty.

Protests against Mr Thaksin two years ago started small but grew to 100,000-strong crowds before the coup on Sept 19, 2006.

Mr Samak said the police and army were behind him. 'This is not Sept 19. The situation does not warrant another coup.'

Reuters, AFP