The move came as he launched a counter-attack against a rapidly growing campaign to remove him.

"I dissolve parliament," he said on Friday, after an audience with King Bhumibol Adulyadej.

 

Wassana Permlarb, chairman of the Election Commission, said he had accepted the 2 April date.

 

Analysts expect Thaksin, who won in a landslide a year ago, to return to power with a reduced majority in the vote.

 

Thaksin had held out the threat of an early vote in a speech to cheering farmers earlier on Friday, two days before opponents planned to bring 100,000 people onto the streets of Bangkok.

 

Thaksin told 3000 farmers near Bangkok, emphasising his considerable support in the countryside where 70% of Thais live: "If you are sick of me, send me home. But if you want to continue using me, vote for me and I will work for you."

 

He then went into a meeting with businessmen and government officials to propose a pay rise for civil servants and tax breaks for professionals, street hawkers and office workers to undermine the campaign in Bangkok.

 

Analysts say such populist measures might give more ammunition to Thaksin's critics, who have multiplied since his relatives sold Shin Corp, the telecommunications empire Thaksin founded, to a Singapore state firm for a tax-free $1.9 billion.

 

Some economists say the government cannot afford such measures with fears rising that the political crisis could become a drag on the economy. Financial markets have shown signs of nerves over the past few weeks.

 

Thaksin praise

 

But one banker said Thaksin, 56, was right to call an early election.

 

"If you are sick of me, send me home. But if you want to continue using me, vote for me and I will work for you"

Thaksin Shinawatra,
Thai prime minister

 

Apisak Tantivorawong, head of state-owned Krung Thai Bank, said: "This will not have an impact on the overall economy. If he had not done it, things could have got worse."

 

He also won praise for taking the constitutional road in the crisis rather than risk a coup in a country with a long history of military coups.

 

But Thaksin's announcement did not persuade his opponents to call off Sunday's demonstration.

 

Suriyasai Katasila, a spokesman for the People's Alliance for Democracy which is running the campaign against Thaksin, said: "We will certainly rally to confirm our demand to have the prime minister resign."

 

Protest concern

 

Fears the demonstrations could turn violent have increased as more groups joined.

 

Thammarak Isaranura, the defence minister, said: "We are mostly concerned that someone will create a situation in which two opposing groups of people meet in one place and start making trouble."

 

Thaksin's popularity has fallen to 34.5% this month, according to a nationwide poll by Bangkok's Assumption University, compared with 77.5% after winning election a year ago.

 

That was his second big election victory on the back of solid support in the countryside into which he has pumped large amounts of money.