When the red-shirts breached parliament, some officials were evacuated by helicopter
Thailand's Prime Minister Abhisit Vejjajiva has declared a state of emergency in Bangkok amid escalating anti-government protests.
In a televised address, Mr Abhisit said the move - which gives sweeping new powers to the security forces to tackle protesters - would help restore order.
It comes hours after thousands of "red-shirt" protesters marched on parliament - forcing MPs to flee the building.
The protesters want Mr Abhisit to resign and call elections.
Thailand has lurched from one crisis to another since 2006 when the government of Thaksin Shinawatra was overthrown.
This is the fourth state of emergency in the capital since 2008.
The current bout of red-shirt rallies began on 12 March.
The government had vowed not to use force against the red-shirts, and the protesters too had said their demonstrations would not be violent.
Many rural dwellers and urban poor support
red-shirts, while yellow-shirts comprise mainly middle classes and urban elite
September 2008 yellows rally against government, reds counter-rally, clashes in Bangkok
Yellows blockade airport in
November 2008, government collapses, yellow-friendly government installed
April 2009 red protests halt Asean summit, two people die in Bangkok clashes, rallies called off
Reds relaunch protests in
March 2010, splash blood on government buildings, march on parliament
But Mr Abhisit said in his televised address that the protesters could no longer be considered peaceful after their march on parliament.
"Our goal is to restore normalcy," he said.
"We need to plan and implement everything to the last detail and with thorough care. The last thing we want is for the situation to spiral out of control."
Mr Abhisit said the state of emergency applied in the capital and surrounding areas, but it is not yet clear how the authorities will implement the new laws, the BBC's Rachel Harvey in Bangkok says.
Emergency law gives sweeping powers to the security forces and in theory bans public gatherings of more than five people, our correspondent says.
But tens of thousands of anti government protesters remain in the commercial heart of Bangkok and show no signs of moving voluntarily.
They regard Mr Abhisit's government as illegitimate as it was brought to power with military support.
One red-shirt leader, Veera Musikapong, told the protesters after Mr Abhisit's announcement: "We have to prepare for another war. If the military comes you should not panic - just stay put."
A minister attached to Mr Abhisit's office said the authorities would disperse protesters, detain protest leaders and search their houses.
Thousands of red-shirts had earlier gathered outside parliament and were faced with similar numbers of riot police.
The parliamentary session was abandoned shortly after it had begun and senior politicians, including Mr Abhisit, were ushered out of the building by security guards.
While some MPs used ladders to scale walls as they escaped parliament, others were picked up by a military helicopter which landed on the roof of the building.
A group of protesters then barged their way into the grounds of parliament, but retreated shortly afterwards and there were no reports of violence.
Most of the support for the red-shirts comes from rural areas and the urban poor, who benefited from many of Mr Thaksin's populist policies.
On the other side of Thailand's political divide, the urban middle classes and traditional political elite - who protest dressed in yellow - back the current government.