Thai Prime Minister Thaksin Shinawatra has been granted sweeping new powers to deal with attacks by suspected Muslim militants in the country's south.
Another bomb exploded in Yala on Friday, injuring four
The new measures allow him to order the detention of suspects for seven days, censor newspapers and tap phones.
The Thai Cabinet agreed to issue the powerful decree after a series of co-ordinated attacks in the southern city of Yala on Thursday night.
More than 800 people have died in the southern unrest since January 2004.
The emergency powers, which Mr Thaksin was granted without judicial approval, replace the existing martial law.
As the cabinet meeting ended, another bomb went off behind a hospital where many of the injured from the previous night's attacks were being treated.
Home to most of Thailand's 4% Muslim minority
Muslim rebels fought the government up to the mid-80s
Suspected militants have upped attacks since 2004, targeting Buddhists
Security forces' response criticised by rights groups
Four people were hurt, raising the number of injuries in attacks on Yala city - in the province of the same name - to 26, with two fatalities.
Thursday's raids involved up to 60 suspected militants - who attacked Yala hotels, restaurants, a cinema and shops with bombs, guns and Molotov cocktails, after plunging the city into darkness by bombing a power station.
The attacks were highly co-ordinated, officials say, with the gunmen peppering the roads with spikes to prevent the security forces moving around the city.
Mr Thaksin strongly condemned the attacks.
"These people want only violence. It means they do not want to talk," he said, speaking before the emergency cabinet meeting.
"This is the time of national crisis - I would appeal for all Thai people to be united and join hands to fight against the people who have bad intentions toward the country," said Interior Minister Chitchai Wannasathit.
Electricity has now been restored and police spokesman Gen Sanirot Thammayot said the situation was under control and urged residents "not to panic, and to carry on with their lives as normal".
The Thai public at large is looking for a solution to the violence. By concentrating powers within the prime minister's office they will now, more than ever, expect Mr Thaksin to deliver that answer, says the BBC's Kylie Morris in Bangkok.
After enjoying a ringing endorsement at his re-election in February, his approval rating last week slumped to below 50% for the first time.
A slowing down of the economy, matched with corruption claims, have taken the gloss off of the prime minister's popularity.
Thailand is predominantly Buddhist, with its 4% Muslim population concentrated in the troubled southern provinces - Pattani, Yala, Songkhla and Narathiwat.
In recent months, there have been almost daily ambushes and murders of Buddhist monks, teachers, police and soldiers.
Government officials have blamed the unrest on Islamic separatists.
Hardliners within the military have warned that al-Qaeda exercises influence over the insurgents.
But other analysts deny any existence of a joined-up jihad, and talk instead of a coalition of local criminals and separatists, fuelled by disenchantment within the Islamic community in the south.