On Sunday three Muslim rubber-tappers in the province of Yala became the latest victims of the violence.
Police say the three men were ambushed and killed by suspected Muslim fighters.
Tensions between the neighbours over various issues has put on hold plans for joint development schemes agreed in 2004 and designed to provide more jobs and boost the border economy.
Formal bilateral talks in Bangkok on Monday were to include ways to implement the plans to develop the border area, which are among the poorer parts of the countries, Thai officials said.
Both countries agree that poverty is fuelling the unrest in southern Thailand, Abdullah Badawi, the Malaysian prime minister, told the Bangkok Post.
He said: "Malaysia and Thailand agreed that poverty and meagre economic development in the border areas were among the contributing factors which brought about security problems in southern Thailand."
Muslims in Thailand's southern provinces of Narathiwat, Yala and Pattani, often complain of being treated like second-class citizens in Buddhist-dominated Thailand, with inadequate educational and job opportunities.
Who is behind the violence and how organised they are is not clear, but Thai officials blame the violence on Muslim fighters wanting a separate Islamic state.
|The two leaders began talks in Phuket on |
Sunday before moving on to Bangkok [Reuters]
Although the group appears to be largely domestic, last week Malaysia's foreign minister warned of a danger that terrorist groups would use the ongoing violence to build new bases there.
"There is always a danger if people are not happy, some terrorist groups may take advantage of it," Syed Hamid Albar said.
"We must not allow any breeding ground for terrorism to exist or to be nurtured."
'Role to play'
Thailand has rejected the possibility of foreign terrorists setting up on its soil, although officials have said Malaysia could play a role in bringing the violence to an end.
Muslims living in Thailand's south share both the religion and ethnicity of Malays, the largest ethnic group in Malaysia.
"Although it is still a domestic issue, Malaysia - as an immediate neighbour - has a role to play which will also be for the benefits of both countries," Wasinond said on Sunday.