Prime Minister Yingluck Shinawatra announced the dissolution of the House of Representatives on Monday after a huge turnout of anti-government protesters determined to end to the "Thaksin regime" - but the protest continued.
Ms Yingluck made the announcement on Monday morning in an address broadcast by Thai Television Pool of Thailand. She said she would remain the head of the caretaker government until there is a new cabinet.
The protesters are demanding she and her interim cabinet resign, to make way for a "people's council" that would decide on major reforms and the form of the new government ahead of elections.
"The situation seems likely to escalate to violence so the government has decided to return power to the people and let them decide through elections," the prime minister said in her nationwide broadcast.
The decision was made as tens of thousands of protesters began marching to Government House.
An estimated 200,000 demonstrators were gathered in Ratchadamnoen and Ratchadamnoen Nok avenues on Monday morning, near the Democracy Monument.
The main rally led by protest leader Suthep Thaugsuban was at least three kilometres long when it began the almost 30km march from the Government complex on Chaeng Wattana Road to Government House in the centre of Bangkok.
Bangkok Post photos
"The prime minister's decision came a little too late,'' Chaiyan Chaiyaporn, a political analyst of Chulalongkorn University, told FM101 radio station. Anti-government protesters were already marching on the streets.
Nine armies of protesters were organised by the People's Democratic Reform Committee (PDRC). Groups from various rallying points, including university students and people from Wong Wian Yai across the Chao Phraya River, joined the march as they converged on Government House.
Ms Yingluck's decision was aimed at ending the rallies, but it was now it was up to the protest leaders, he said
"The momentum has shifted to the protest leaders, to how they will react (to the prime minister's decision),'' Mr Chaiyan said. "The House dissolution does not mean the defeat of the government. It is the last resort of the government,'' he added.
Suthep Thaugsuban, the proclaimed PDRC secretary-general, made it clear that a House dissolution, or a resignation by the premier, would not be enough to end the rallies - not until the "Thaksin influence" is uprooted from the country.
He would make an important announcement at Government House this evening, PDRC core member Sathit Wongnongtoey said.
The rally on Monday was joined by all former leaders of the People's Alliance for Democracy (PAD), including Sondhi Limthongkul, who said before walking from Ban Phra Arthit that the PDRC is playing a leading role in the campaign to end the Thaksin influence.
Pibhop Thongchai, a former PAD leader, said the House dissolution was not enough, not until the goal is achieved. The prime minister remains in power despite the dissolution of the House, he said.
The army encouraged all sides involved in the political unrest to come to a peaceful resolution, despite having different point of views.
Deputy army spokesman Col Winthai Suwaree said the military does not want any violent conflict between fellow Thais.
"Political tensions have eased up to an extent. [The army] hopes that all parties will cooperate and act within the rule so that the situation can be properly resolved," he said.
Col Winthai stressed that everyone should keep the country's best interests in mind. The armed forces would do their utmost to serve the country and the people.
The head of the police Centre for the Administration of Peace and Order (Capo) issued a statement asking the people, including students, taking part in the anti-government protests to go home now that the prime minister had dissolved the House of Representatives to return power to the people.
The plea was made in a statement delivered by Deputy Prime Minister Surapong Tovichakchaikul, who is in charge of the Capo.
Mr Surapong asked for the protesters' cooperation, saying this would help to quickly restore the country's image and maintain a democratic system under the constitution.
Video by Panumas Sanguanwong