The government has appointed Prime Minister's Office Minister Suwaphan Tanyuvardhana to lead a panel to resolve the conflict over the housing project built for judges and judicial officials at the foot of Doi Suthep in Chiang Mai.
Prime Minister Prayut Chan-o-cha said negotiations, led by Mr Suwaphan, involving all stakeholders will decide the fate of the billion-baht project, have yielded promising results so far.
The prime minister did not reveal Tuesday with whom Mr Suwaphan has held talks.
On Tuesday, the Facebook page ThaigovSpokesman (Thai Khu Fah) operated by the government, published a post inviting the public to voice their opinions and give suggestions on how the dispute should be dealt with.
In 16 hours, the post spawned more than 14,000 responses, with the majority saying that although the construction of the project is not illegal, it is inappropriate and anti-environmental.
However, there was no consensus as to whether the project should be demolished or repurposed, with opinions split down the middle.
"The government cares about the feelings of Chiang Mai residents, but to solve the problem, reason must also be applied," said the prime minister.
He also made further comments on how best to deal with the issue after 5,000 Chiang Mai residents on Sunday marched through the city to demand the demolition of the housing project and the restoration of the forest. They gave the prime minister a one-week ultimatum to resolve the issue.
The rally was the biggest protest against authorities since the 2014 coup.
Gen Prayut, addressing the demands of the protesters, urged the public not to use the term ultimatum, saying the government was doing its best to appease all sides.
The premier stated that although the dispute has worried him, many aspects must be taken into consideration since the issue involves various laws.
Deputy Prime Minister Gen Prawit Wongsuwon reiterated that the government is working on the issue, and that he believes the result will be agreeable to everyone.