The state Thai News Agency reported that Tej was resigning to attend to his sick wife.

His resignation added to Samak's woes as thousands of anti-government protesters continued to occupy his office grounds on Wednesday, defying emergency laws he declared the day before.

Samak declared a state of emergency for Bangkok on Tuesday, a week after tens of thousands of demonstratorfs led by the People's Alliance for Democracy (PAD) laid siege to his official compound.

But the military, given charge of restoring order, has yet to move on the protesters.

In depth


Timeline: Political crisis

Profile: The PAD

The emergency rule came after political tensions exploded into rioting and street fighting between Samak's supporters and opponents early this week, leaving at least one person dead and dozens more injured.

The protesters continue to demand Samak's resignation on Wednesday.

But in a change of tack, they indicated on Wednesday that they would no longer demand his government quit as well.

The move could undermine support from Samak's coalition partners and put more pressure on him to go.

Tej's reported resignation could further strain coalition ties.

Somsak Kosaisuk, one of the protest leaders, said the protesters "will not hold talks with the government or anyone" until the prime minister steps down.

But there is no indication that Samak - accused of being a stooge to Thaksin Shinawatra, the prime minister ousted in a coup in 2006, and of running the government for him by proxy - will resign.

Tourism threatened

The growing unrest in the Thai capital is now threatening to cripple the country's vital tourism business as 12 countries have issued warnings for their citizens not to travel there.

Protesters are now demanding that only Samak quit, not his government [AFP]
Al Jazeera's Selina Downes, reporting from Bangkok on Wednesday, said tensions in the capital showed no signs of abating.

Public sector employees had also threatened to disrupt transportation services and cut off water and power supply to government offices.

The 200,000-strong State Enterprises Workers' Relations Confederation called for a strike to bolster street protesters' demands.

But Thai officials said on Wednesday that there were so far no reports of any disruption and that most employees had turned up for work and the services were running as usual.

Last week railway workers disrupted train services, with service suspended on nearly half of Thailand's lines over the weekend.

Legal challenge

Samak also faces a legal challenge after the country's election commission recommended that his People's Power party (PPP) be disbanded for alleged electoral fraud committed during December's elections.

The commission on Tuesday forwarded its findings to the attorney-general's office to decide whether to submit the case to the constitutional court for a final ruling.

Samak and other party leaders would be banned from politics for five years if the ruling is upheld, although other members could form a new party and retain power by winning new elections.

Tuesday's move was reminiscent of the court dissolving of Thaksin's Thai Rak Thai party last year. The party later regrouped under the PPP flag.