Thai Prime Minister Yingluck Shinawatra dissolved parliament on Monday and called a snap election, but anti-government protest leaders pressed ahead with mass demonstrations seeking to install an unelected body to run the country.
About 100,000 protesters marched through Bangkok, extending a rally that descended into violence before pausing late last week to honor the king's birthday. Blowing whistles, they vowed to oust Yingluck and eradicate the influence of her self-exiled brother, former prime minister Thaksin Shinawatra.
"At this stage, when there are many people opposed to the government from many groups, the best way is to give back the power to the Thai people and hold an election. So the Thai people will decide," Yingluck said in a televised address as the protests resumed across Bangkok.
The protesters ignored Yingluck's announcement, deepening nearly a decade of rivalry between forces aligned with the Bangkok-based establishment and those who support Thaksin, a former telecommunications tycoon who won huge support in the countryside with pro-poor policies.
Protest leader Suthep Thaugsuban told Reuters he would lead a march to Yingluck's offices at Government House as planned.
"We have not yet reached our goal. The dissolving of parliament is not our aim," said Suthep, a former deputy prime minister under the previous military-backed government.
Yingluck's Puea Thai Party won the last election in 2011 by a landslide, enjoying widespread support in the north and northeast, Thailand's poorest regions. The pro-establishment opposition Democrat Party has not won an election since 1992.
Yingluck, Thailand's first woman prime minister, will stand again. "She will definitely run," said Jarupong Ruangsuwan, head of her party. "We want the Democrat Party to take part in elections and not to play street games."
The Election Commission has not set a date for the vote which must be held between 45 and 60 days of a dissolution.
Aware Yingluck and Thaksin's allies would almost certainly win, Suthep has called for a "people's council" of appointed "good people" to replace the government. Yingluck has dismissed the idea as unconstitutional and undemocratic.
Saying they were unable to work with Yingluck, the Democrats on Sunday resigned en masse from the House of Representatives, raising the question whether they would boycott the election and send Thailand into a deeper spiral.
Such a move would raise the prospect of a minority of people in Thailand, a fast-growing country of 66 million people in the heart of Southeast Asia with the region's second-biggest economy, dislodging a democratically elected leader without help from the military.
Calling an election will not end the deadlock if the Democrats boycott it, said Pavin Chachavalpongpun of Kyoto University's Centre for Southeast Asian Studies.
In 2006, amid mass protests, the Democrats refused to contest a snap election called by Thaksin, who was deposed by the military five months later.
"This is only a short-term solution because there is no guarantee that the Democrats will come back and play by the rules," says Pavin. "We don't know whether they will boycott the elections or not.
"It seems like Thailand is going nowhere," he said.
Democrat Party leader Abhisit Vejjajiva sidestepped a question on whether his party would take part.
"House dissolution is the first step towards solving the problem," Abhisit, a former prime minister, told Reuters as he marched with thousands of flag-waving protesters in Bangkok's central business district. "Today, we march. I will walk with the people to Government House."
Many protesters such as Winai Putonghua, a small business owner, said dissolving parliament solved nothing. "We will fight until power is in the hands of the people. We don't need more politicians to rob this country," he said.
Suthep has told his supporters they have to take back power from what he calls the illegitimate "Thaksin regime" and that they cannot rely on the army to help.
The politically powerful army, which has staged or attempted 18 coups in the past 80 years, has said it does not want to get involved though it has tried to mediate.
Thaksin fled Thailand in 2008 to avoid a graft conviction but has remained closely involved with his sister's government. The protests were sparked last month by a government bid to introduce an amnesty that would have expunged his conviction.
The Thai baht rose to 32.05 per dollar in reaction to Yingluck's announcement but then slipped back to around 32.12, up about 0.3 percent from Friday, when comments from Suthep and others made it clear an early election might not end the crisis.
The stock market reacted in the same way, adding more than 1 percent in early trade, then slipping. It was up 0.6 percent at 0410 GMT.
(Additional reporting by Andrew R.C. Marshall and Apornrath Phoonphongphiphat; Writing by Jason Szep; Editing by Robert Birsel and Nick Macfie)