Meanwhile, opposition leader Banyat Bantadtan has conceded defeat. "I was shocked when I saw the exit polls, that Thai Rak Thai managed to win 399 (seats) and the Democrats won only 80, but we have to accept what the public gave us," he said.
"I would like to congratulate Thai Rak Thai. We have to accept the outcome because that is the voters' will."
Banyat added: "We know today that we will be the opposition, and we will be as vigorous an opposition as we can. Thai Rak Thai will have a single-party government."
Thaksin offered his thanks to voters as he arrived at his party headquarters. "I thank the voters for their overwhelming support of my party," he said.
The announcement came after Thai television released exit poll results within 90 minutes of polls closing at 3pm (0800 GMT) showing TRT had won 399 of the 500 seats in the House of Representatives.
At the Democrat headquarters in Bangkok, a dozen party supporters watched as the results came in on a big screen.
Thai Rak Thai party has secured
an overwhelming majority
Abhisit Vejjajiva, a rising star for the opposition, also conceded defeat but expressed hopes for an accountable government and solid opposition.
"Personally, I hope the Democrat Party ends up with more seats than the exit polls showed," Abhisit told local television.
"But whatever the result is, we have to accept it and work as we have worked in the past to be our best."
Abhisit added, "Since Thai Rak Thai has secured an overwhelming majority, guaranteeing its stability in parliament, I ask the prime minister to open up his government for checks and balances."
A Bangkok deputy governor, Samart Ratchapolisitte, said the party's drubbing meant it would have to sit back and analyse where it was headed.
"I ask the prime minister to open up his government for checks and balances"
"If the actual results match the exit polls then we have to think about how to improve the party. It might be that we have to find the reasons that the results are like this. We have to sit and talk to analysts."
In Thailand's restive southern provinces, voting was conducted under heavy security.
Voting was by and large peaceful
in insurgency-hit south Thailand
Voters trickled into polling stations under the watch of about 2000 special police deployed across Yala, Pattani, Narathiwat and Songkhla provinces, where a Muslim insurgency has raged since January last year.
No violence was reported in the first hours of voting, as security forces in the provincial capital Pattani made themselves highly visible, with military Humvees patrolling the streets and armed guards watching over polling stations.
The mainly Muslim southern provinces in predominantly Buddhist Thailand have suffered almost daily killings since the insurgency broke out 13 months ago, leaving more than 580 dead.
Thaksin has faced tough criticism for his heavy-handed response to the insurgency, noteably two controversial clashes that ended with the deaths of hundreds of separatists or protesters.