On Thursday, Mr Abhisit said he would no longer be attending this year's Asean summit, currently taking place in Hanoi.
The BBC's Rachel Harvey in Bangkok says the decision was taken very late and very reluctantly, but that the domestic situation is now so delicate, he clearly feels it would not be wise to leave the country.
The state of emergency gives sweeping powers to the security forces and in theory bans public gatherings of more than five people, our correspondent says.
Mr Abhisit said it applied in the capital and surrounding areas, but it is not yet clear how the authorities will implement the new laws.
It is the fourth state of emergency in the capital since 2008.
Thailand has lurched from one crisis to another since 2006 when the government of Thaksin Shinawatra was overthrown.
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.
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