"To (the relatives of) anyone in the general public, who does not work directly with chickens, who dies from eating cooked chicken or eggs I will pay three million baht ($76,000) out of my own pocket," he said in his weekly radio address.
"I can reassure all of you that based on scientific fact it is not harmful to eat well-cooked chicken and eggs, as the virus will die in high temperature," he said.
"If they're well-cooked, they are one million percent safe," he added, citing World Health Organisation (WHO) assurances that the bird flu virus would die if infected poultry or eggs were cooked at 75 degrees Celsius.
Thaksin also vowed to pay 100,000 baht in addition to hospital expenses to anyone falling sick from eating cooked chicken or eggs.
To allay fears, Thaksin popped into a restaurant in Bangkok and ordered a chicken platter lunch, Thai radio said.
Two Thai boys have died from the H5N1 virus, with another seven suspected bird flu deaths recorded in the kingdom.
"To (the relatives of) anyone in the general public, who does not work directly with chickens, who dies from eating cooked chicken or eggs I will pay three million baht ($76,000) out of my own pocket"
Thai Prime Minister
Bird flu outbreaks have been reported in 32 provinces, including the capital.
The Thai premier said 14 million chickens were culled to prevent the spread of the disease, which has devastated many of Thailand's small farms as well as its $1.2 billion chicken export industry.
On Friday the government said it would organise a national "Chicken Day" next week to boost consumer confidence in poultry products, with Thaksin himself cooking up some chicken dishes.
The campaign has raised eyebrows after Thaksin was ridiculed last week for taking part with his ministers in a televised chicken lunch aimed at reinforcing the government's insistence that bird flu had not hit Thailand.
Just three days later he was forced to admit that it had been detected in the kingdom.
Thaksin, who has come under fire over allegations his government covered up the bird flu outbreak, said his administration would come clean in releasing test results of the 12 suspected cases.
Thaksin (R) has promised to come
clean on future test results
"For suspected cases, some may have the bird flu virus but the laboratory tests have not yet concluded so," he said.
"If it is confirmed the government will announce it straightaway. There is nothing to hide."
Health officials reportedly said government laboratory tests on several tissue samples from the suspect cases were unsuccessful.
"Not enough samples have been collected, senior health official Suphan Srithamma told the Nation newspaper.
"We will have to send samples to the WHO's lab in Australia and the US CDC (Centres for Disease Control) for further testing," he said.