BANGKOK (AFP) - Thailand's ousted prime minister Yingluck Shinawatra insisted on her innocence Tuesday at the start of a trial that could see her jailed for a decade, part of what observers say is a vendetta against her family.

It is the latest legal move against Yingluck - sister of fugitive billionaire ex-premier Thaksin Shinawatra - whose administration was toppled in a military coup nearly a year ago. Shortly after Yingluck's court appearance, junta leader Prayut Chan-O-Cha raised the possibility of holding a referendum on a contentious new constitution he says is vital to bridging the nation's trenchant political divide.

But any plebiscite - in a nation where political gatherings are still banned by the military - would "postpone the roadmap" for elections slated for early 2016, Prayut told reporters.

Around 50 supporters gathered outside Thailand's Supreme Court on the northern outskirts of Bangkok including more than a dozen members of Yingluck's Pheu Thai Party, a rare public act of defiance of the junta.

A guilty conviction for Yingluck could deliver a hammer blow to the political dominance of her family, but it also risks stirring up their grassroots "Red Shirt" supporters who have remained largely inactive since the military took over.

"I am confident that I am innocent," Yingluck told reporters outside the courthouse.

The ousted premier is accused of criminal negligence over a populist rice subsidy scheme, which paid farmers in the rural Shinawatra heartland twice the market rate for their crop.

She is not accused of personal corruption but of failing to prevent alleged graft within the programme, which cost Thailand billions of dollars and galvanised protests against her elected government prior to last May's coup. The charge carries up to 10 years in jail.

During the brief hearing, Yingluck spoke only to plead not guilty.

The court granted 30 million baht (S$1 million) bail on condition that she will not leave Thailand without written permission, and the next hearing was scheduled for July 21.

'Hawks want her punished'

Thailand's military-appointed parliament impeached Yingluck in January over the scheme, a move which banned her from politics for five years. "I believe a hawkish faction in the old powers... wants to punish the Shinawatras as much as they can," Puangthong Pawakapan, a Thai politics expert at Chulalongkorn University, told AFP.

"But keeping her in prison will definitely anger the Red Shirts even more," she added. Other analysts say the mere threat of jail may be used to discourage the Shinawatras from re-engaging in politics.

Yingluck herself has defened the rice scheme as an effort to boost incomes in the poor northeast of a country which traditionally receives a smaller slice of state cash than Bangkok, despite being home to a third of the country's population.

The army takeover last year was the latest twist in a decade of political turbulence that broadly pits a Bangkok-based elite, backed by parts of the military and judiciary, against poor urban and rural voters, particularly in the country's north, who are fiercely loyal to the Shinawatras.

Thaksin was himself toppled by a previous coup in 2006 and now lives in self-exile to avoid jail on a corruption charge. As Yingluck went into court, Thaksin made rare public comments at a conference in South Korea calling on Asian nations to embrace the "rule of law".

"The key to good governance and democracy is you have to strike a balance" between the judicial, legislative and executive branches, he said at the Asian Leadership Conference. "And also you have to observe the rule of law, which is a very important asset for each country to be credible," he added.

His comments did not specifically refer to Thailand but are nonetheless likely to chime with his so-called "Red Shirt" supporters who have long accused Thailand's judiciary of unfairly targeting their movement.

The Shinawatras, or parties allied to them, have won every Thai election since 2001. But their opponents accuse them of cronyism, corruption and financially ruinous populist policies.

As a result, the Shinawatra family have faced two coups and the removal of three of their premiers by the Thai courts, while several deadly rounds of protest have rocked Bangkok and weighed on the Thai economy.

Former prime minister Somchai Wongsawat, brother-in-law to Yingluck and Thaksin, is also due to enter a plea on Thursday to criminal charges over a crackdown against anti-Shinawatra protesters in 2008.