Some 6000 protesters in the capital on Saturday demanded Thaksin Shinawatra's resignation. Their protesters' numbers were expected to increase once night fell.
Chanting "Thaksin get out", they held banners that read: "Thaksin=Toxin: Master of Evil" and many wore large stickers printed with a caricature of the prime minister with a Hitler-type moustache and the slogan "Wanted - Dead or Alive".
Thaksin has repeatedly refused to quit despite last weekend's peaceful 18-hour rally which drew at least 50,000 people - the biggest demonstration since he took office almost five years ago.
Thaksin said he would consult electoral officials on a referendum asking voters if they wanted the 1997 "People's Constitution" amended.
He said in his weekly radio address that the referendum could be held at the same time as elections for the Senate on 19 April.
"Many of those who call for charter amendments were once its staunch supporters. They say it gives the government too much power. If they say so, I will let everyone decide," he said.
"If a majority of people say they want the change, then we will discuss how."
"I think our prime minister is not honest. He sold our assets, our satellites and mobile phones, to Singapore"
Thaksin won a second landslide election victory only a year ago, but has seen his popularity wane swiftly among the urban middle-class since his family's
tax-free sale last month of the telecom empire he founded.
The sale of Shin Corp to Singapore state investment company Temasek helped to trigger the the biggest anti-government rally in 14 years in central Bangkok last weekend.
On Saturday, one of the protesters, 27-year-old Dananat Nimitanya, said: "I think our prime minister is not honest. He sold our assets, our satellites and mobile phones, to Singapore. His action is stupid, and he's not sincere."
"I will keep coming every week," he said as he handed out yellow bandanas, a colour associated with Thailand's deeply revered king, the world's longest serving monarch. Many in the crowd wore yellow T-shirts and waved yellow banners.
Police had earlier banned protesters from holding their rally at the Royal Plaza, which is also closely identified with King Bhumibol Adulyadej, and threatened to arrest anyone who defied the order.
But after several hundred demonstrators marched arm-in-arm into the square, negotiations took place and they were eventually allowed in under the watch of hundreds of police officers.
Thaksin is facing the biggest test
of his five-year premiership
Thailand's Special Branch Police had said it expected 60,000-70,000 people to attend the demonstration which was due to end before midnight. However, the National Intelligence Agency predicted just 20,000.
The turnout will be seen as an indication of whether the anti-government campaign is gathering pace or losing its momentum.
Meanwhile, several pro-Thaksin rallies were being held in the prime minister's strongholds in the country's rural north and northeast, drawing several thousand people to each.