Alistair Leithead reports on the violence that left a TV news cameraman dead
Pressure is mounting on Thailand's Prime Minister Abhisit Vejjajiva, days after 21 people died in clashes between troops and anti-government protesters.
The army chief says parliament should be dissolved, and election officials have recommended Mr Abhisit's party be disbanded over illegal donations.
Mr Abhisit, widely perceived to have strong army backing, said his coalition and the military remained united.
Saturday's clashes were the deadliest political violence since 1992.
Seventeen civilians died in the unrest - including a Japanese cameraman working for Reuters news agency. At least four soldiers were also killed and 800 other people were injured.
Red-shirted protesters have been camped out at various sites in Bangkok for a month.
They say Mr Abhisit's government is illegitimate and have vowed not to leave until a fresh election is called.
Speaking to journalists, army head Gen Anupong Paojinda said he was reluctant to use force to end the stand-off.
"The problem will be resolved with House dissolution, but when to dissolve depends on the outcome of negotiations," he said.
The army plays a prominent role in Thai politics - former Prime Minister Thaksin Shinawatra was ousted by the military in 2006.
Shortly after Gen Anupong had spoken, the Election Commission recommended that Mr Abhisit's Democrat Party should be dissolved.
Red-shirt protesters paraded coffins through Bangkok
The ruling will now be sent to the attorney-general's office for referral to the Constitutional Court.
The red-shirts brought the case, alleging that the Democrat Party failed to declare more than 258m baht ($8m; £5.2m) in donations from a private firm during the 2005 election campaign.
Several governments have been thrown out in recent years following rulings from the Electoral Commission.
"This is a victory for us. Our democracy heroes didn't die in vain," said red-shirted protester Veera Musikapong after the commission's announcement.
The BBC's Rachel Harvey in Bangkok says the commission's decision could eventually trigger the collapse of the ruling coalition.
She says there are several legal steps before that happens, but the timing of the announcement makes Mr Abhisit look increasingly beleaguered.
Pressure on Mr Abhisit has been rising since the red-shirts began their protest a month ago, forcing businesses to close and at one stage storming parliament.
Formally called the United Front for Democracy Against Dictatorship (UDD)
Mostly poorer workers from rural areas
Many are loyal to ousted PM Thaksin Shinawatra
Believe Mr Abhisit came to power illegally and want him to resign and call elections
Known as the Peoples' Alliance for Democracy
Loose coalition of mostly urban middle-class royalists and businessmen
United by their hatred of Mr Thaksin who was ousted in 2006
Occupied airports and official buildings in 2008, precipitating a political crisis
The prime minister had vowed not to use force against the demonstrators, but his supporters had been urging him to take stronger action.
Saturday's violence was sparked when security forces tried to remove protesters from an area of the city they had been occupying.
The protesters eventually forced the army to retreat.
Early on Monday, the red-shirts paraded coffins through Bangkok.
Most of the coffins were empty, but at least two contained the bodies of demonstrators killed in the clashes.
Both sides accuse each other of firing live bullets during the confrontation.
Mr Abhisit blamed "terrorists" for causing the violence and promised to distinguish between them and "innocent protesters".
"At present, the government, the army, the police, ministries and coalition parties are united in working together with the aim to resolve all the problems," he said.