In an incident certain to inflame religious tensions, the two marines were seized on Tuesday night in Tanyonglimo village in Narathiwat province, after they were suspected of opening fire on a local tea shop, killing two civilians and wounding three others.
The military denied the men - armed but dressed in plainclothes - were the shooters, saying they had gone to the area to investigate the incident, which officials blamed on Muslim insurgents.
Villagers held Ensign Vinai Nabut and Petty Officer First Class Khamton Thongeiat prisoner overnight, while the government sent intermediaries to negotiate for their release after villagers blocked security forces from entering the area.
On Wednesday, the two men fell under the control of a small group of unidentified fighters, who beat and stabbed them to death, said the military and witnesses. Their bloody, battered bodies were recovered afterwards by the authorities.
"What happened shows that these people want violence and not peace," Thaksin said in Bangkok.
"The authorities tried to negotiate with them and were extremely patient, but these people came back with inhuman cruelty and torture."
Thaksin said he would not let the two marines "die for no reason".
Bombings have targeted both
Buddhists and moderate Muslims
"The law is the law," he said. "The authorities have to track down these wrongdoers and punish them as soon as possible".
Thailand's three southernmost provinces - the only ones with Muslim majorities in the Buddhist-dominated country - have been wracked by an separatist insurgency in which more than 1000 people have died since January last year.
The Buddhist establishment - monks, teachers, policemen, soldiers - and moderate Muslims have been targeted in bombings, beheadings and drive-by shootings that the government blames on insurgents.
In response, security forces have slain scores of insurgent suspects, drawing international condemnation for the severity of the crackdown.
Wednesday's incident illustrated the growing distrust of the authorities and raised prospects that the crackdown might be intensified, although the government recently has tried to be measured in its response.
Army Leuitenant-General Kwanchart Klaharn, chief of the Southern Province Peacekeeping Command, described the killings as well-planned and vowed that tough measures would be taken against the perpetrators.
Critics accuse Thai PM Shinawatra
of escalating the violence
"We have sealed off the village and we think we can soon get the killers," Kwanchart said at a news conference.
Najmudin Uma, a local Muslim notable who arrived in the village early Wednesday morning to serve as a negotiator, told Thai television station ITV that when he got there, the two men were tied up but not otherwise mistreated, and had been given food and water.
Najmudin said the stabbing happened around 2pm after villagers started "whispering" that people dressed as soldiers were entering the village through a rubber plantation. This drew some of the older members of the community away from the prisoners, while others went to the mosque to pray.
"At that moment, three or four youths entered and killed them (the marines)," he said Najmudin, describing the killers as "a group of four to five hooded men."
"The authorities have to track down these wrongdoers and punish them as soon as possible"
Thai Prime Minister
Although a statement issued by the peacekeeping command thanked the area's people "for their understanding and support," women and children had formed a human barricade while other locals placed logs across roads to block outsiders from entering the village before the marines were killed.
Residents held placards in the local dialect of Malay, attacking the Thaksin government.
"Evil has spread since Thaksin's party came to power. Ethnic Malay people have been cruelly killed by soldiers. They are the real terrorists," the placards read.