The protesters, bearing Thai flags and chanting anti-Government slogans, walked at dawn past monuments commemorating the country’s past struggles for democracy.

“This is people power,” boomed loudspeakers mounted on a truck. “We are united. This Government has no moral authority. If you’re free, people join us and make political history.”

The protest was the largest and most vociferous so far in the intensifying political crisis and blocked rush-hour traffic from roads around government ministries in the city.

But despite rumours of an imminent government crackdown and the presence of 20,000 watchful police, the march was peaceful and disciplined as it approached Government House. Tourists and local people in other parts of the capital went about their business.

A demonstration by a few hundred supporters of Mr Thaksin was kept away from the protest.

“I pray that they won’t meet at Government House,” Ajiravid Subarnbhesaj, the national police spokesman, said.

The campaign to unseat the Prime Minister has opened deep and dangerous divisions in Thailand, previously regarded as one of the more stable nations in South-East Asia.

Mr Thaksin is a former police officer who became a billionaire as head of the Shin Corporation, a mobile phone and media conglomerate. His Thai Rak Thai (Thais Love Thais) party came to power in 2001. Last year he was re-elected with 377 out of the parliament’s 500 seats.

He draws his support from the countryside, where two thirds of Thais live. By setting up “village funds”, which provide cheap loans to farmers, and by providing health care for a fixed price of 30 baht (44 pence) per hospital visit, he has won a devoted following among a population that formerly felt itself to be unrepresented.

Among much of the urban middle class, however, he has become a bête noire, caricatured as a fork-tongued lizard, and his enemies accuse him of using his great wealth to compromise human rights and freedom of the press and of undermining the Constitution.

His “war on drugs” led to the deaths of 2,000 alleged dealers, Mr Thaksin’s friends and associates have gained commercial control over much of the broadcast media and he is accused of loading the judiciary and election commission with cronies.

But the simmering discontent came to the boil in January when he announced the sale of Shin Corporation to the investment arm of the Singaporean Government for 77.3 billion bhat (£1.14 billion). Not only was a strategic industry being sold to a foreign power, it also emerged that Mr Thaksin’s family had managed to avoid paying any tax on the sale.

Three weeks ago Mr Thaksin seized the initiative by calling a general election for April 2. The opposition parties, who know that he could expect to win another majority, have boycotted it in the hope of rendering it invalid. Both sides have refused to compromise, provoking fears of street fighting between their supporters or a police or military crackdown similar to that which left 50 anti-government demonstrators dead during the last big political crisis, in 1992.

Thaksin's record

• Village development
  For: cheap loans and healthcare have revitalised villages
  Against: Has left the rural poor with a burden of debt and created dependency
• Human rights
  For: campaign against drug dealers wiped out a corrosive social problem; tough approach in south has shown an intolerance of terrorism
  Against: drug war has been pretext for thousands of extrajudicial killings
• The media
  For: TV reflects his overwhelming popularity
  Against: TV channels under control of Thaksin supporters have stifled critical coverage
• The Government
  For: practical "chief executive" style has brought much-needed decisiveness
  Against: has appointed cronies and undermined independence of the State

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