Troops are keeping order on the streets of Bangkok after a day of clashes between police and anti-government protesters.

One man was killed by a car bomb near parliament, police said, where protesters involved in a four-month campaign to unseat the government battled riot police in clouds of teargas.

By evening, 381 people had been treated for teargas and other injuries, with 48 of them seriously hurt.

It was the worst street violence to erupt in Bangkok since clashes between the army and pro-democracy activists in 1992.

Army commander Anupong Paochinda said police asked for help and he denied rumours of a coup, two years after the military ousted Prime Minister Thaksin Shinawatra in a bloodless coup.

"People should not panic. Soldiers will not launch a coup since it will not be good for the country," he said.

The clashes began after dawn when police cleared a path through 5,000 members of the People's Alliance for Democracy (PAD) besieging parliament since Monday in a bid to bar cabinet ministers from the opening session.

Reports said two policemen were shot and another stabbed.

One protester lost a foot and another had his leg severed by exploding gas canisters, prompting Deputy Prime Minister Chavalit Yongchaiyudh to take responsibility and quit.

He said he had asked police to exercise restraint. "Since this action did not achieve what I planned, I want to show my responsibility for this operation," Mr Chavalit said in his resignation letter.

As soldiers moved into the streets, the PAD, an extra-parliamentary coalition of businessmen, academics and activists, began pulling back to the Government House compound it has occupied since late August.

The group accuses new Prime Minister Somchai Wongsawat of being a puppet for Mr Thaksin, his brother-in-law, and vowed to keep campaigning until he dissolved parliament.

The PAD argues Thai democracy has been undermined by billionaire Mr Thaksin and his allies, who easily won the last three elections, and has called for "new politics" that would include a proportion of appointed MPs.

"Overthrow the Thaksin regime. Together we win or lose. We will know it today. We won't give up," PAD leader Anchalee Paireerak said.

Despite cutting power to the building, the PAD failed to stop Mr Somchai's speech to parliament.

He called for national reconciliation to end a three-year crisis pitting Mr Thaksin and his rural base against the royalist and military establishment believed to be backing the PAD.

"This government is determined to tackle economic problems and to listen to all sides to find a solution to end the crisis," Mr Somchai said.

© Independent Television News Limited 2009. All rights reserved.