After the police pulled back, the red shirts retreated to a camp they have set up behind the barriers.
But Al Jazeera's Wayne Hay, reporting from Bangkok, said that the riot police had warned they would return if the protestors did not dismantle the barricades.
Red shirt leaders were meeting to consider the demand but also threatened to set fire to the fuel-soaked barriers if there was a crackdown, our correspondent said.
Tensions could rise further as the group of so-called multi-coloured protesters – who have demanded the red shirts end their protests and leave the capital – plans a major rally on Friday.
Panitan Wattanayagorn, a spokesman for the Thai government, told Al Jazeera that the red shirts had been given until 10pm (1500 GMT) on Friday to pull down their barricade.
"If they don't, we will prepare to push them to their original section, but we want negotiations first," he said.
Panitan would not say what security forces would do if the red shirts refused and could not say if violence would break out again.
"We do not want a confrontation and the soldiers can only use live ammunition to fire in the air and for self defence," he said.
The army had blamed the red shirts for Thursday's grenade attacks, even before all five explosions had taken place and Suthep Thaugsuban, the deputy prime minister, went on television to say that the grenades had been fired from an M79 grenade launcher from within the red shirts' protest area.
Protest leaders denied they were to blame.
Sean Boonpracong, a spokesman for the group, told Al Jazeera that "the government was too quick to place the blame on last night's violence on us".
He added that the movement was "open to negotiations but with a third party, like the United Nations - someone we can trust – because as far was we are concerned, this government has lost all legitimacy and every promise they have made, they have not kept".
'Time running out'
The red shirts, many of whom support Thaksin Shinawatra, the former prime minister ousted in a 2006 coup, have been occupying Bangkok's main upmarket shopping area in Rachaprasong for three weeks.
Any attempt to disperse them risks heavy casualties and the prospect of clashes spilling into high-end residential areas.
|Thai officials say an M79 grenade launcher was used in Thursday's attacks [AFP]
A failed attempt by security forces to flush protesters from a historic district in Bangkok on April 10 erupted into the worst political violence Thailand has seen in 18 years, leaving 25 dead and more than 800 wounded.
The red shirts later consolidated at the Rachaprasong area and have fortified their base.
Under growing pressure to restore order, the army warned the red shirts on Thursday that their "days are numbered" as soldiers would crack down soon.
"To take people in Bangkok hostage is not right," Colonel Sansern Kaewkamnerd, an army spokesman, said.
"Your time to leave the area is running out."
But Suthep, the deputy premier, said on Thursday night that there would be no crackdown because women and children were in the area.
The red shirts, formally known as the United Front for Democracy against Dictatorship, want the prime minister to step down, dissolve parliament and call new elections.
But Abhisit Vejjajiva has rejected claims that his government is illegitimate and has refused to step down.
The central bank said on Wednesday that the political crisis was affecting confidence, tourism, private consumption and investment, although exports, which are crucial to economic growth, have been little affected by the unrest.