Samak Sundaravej, an ally of Thaksin Shinawatra, was elected in January
The Thai Prime Minister, Samak Sundaravej, has said martial law will now be lifted from most of the country.
Martial law was imposed by the military government which took power in a coup in 2006.
Mr Samak said the restrictions were no longer needed, following democratic elections in December, and the restoration of civilian rule.
However martial law will remain in three southern provinces, where there is a violent separatist insurgency.
"At today's meeting of the National Security Council, we agreed to lift martial law in 170 districts of 31 provinces," Mr Samak told reporters.
The restrictions have been gradually lifted since they were imposed after the coup in October 2006, but remain in around half the country.
New security law
The army coup ousted the prime minister, Thaksin Shinawatra, who went into exile.
However his allies, the People Power Party, were swept to power in December's elections, and Mr Shinawatra has since returned to Thailand.
Mr Samak said martial law was no longer necessary because a new Internal Security Act had now been passed.
The new security law was drafted by the military government, and human rights groups say it gives wide and ill-defined powers to the army.
Martial law will remain in the southern provinces of Yala, Pattani and Narathiwat because of a separatist insurgency.