Rachel Harvey: The situation is "chaotic"
Thai forces in Bangkok have fired live rounds after surrounding a fortified protesters' camp amid clashes that left at least eight people dead.
Embassies were closed as protesters set fire to a police bus and shot fireworks at troops, who also responded with tear gas and rubber bullets.
A BBC correspondent says the area is like a war zone with troops firing into a park as a helicopter circled above.
The demonstrators want the prime minister to resign and call elections.
Many of the so-called red-shirt protesters support former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup.
The Bangkok authorities have cut off water and electricity to the camp in a renewed effort by the Thai government to reclaim the city centre.
AT THE SCENE
Rachel Harvey, BBC News, Bangkok
Inside their fortified encampment the protesters are digging in and preparing for a siege.
Outside, soldiers are battling to control the main roads as groups of angry demonstrators do everything in their power to stop their advance.
A bus was set ablaze to block one main road. Elsewhere, protesters have piles of broken concrete, petrol bombs and fireworks at the ready.
Troops have used live rounds, rubber-coated bullets and tear gas to try to disperse them. The British ambassador has urged both sides to step back from the brink and return to the negotiating table.
But there seems little chance of that in the current volatile atmosphere. As night fell the sound of gunfire and explosions filled the air.
Violence escalated after a renegade general who was backing the protest was shot by an unknown gunman on Thursday, leaving him in a critical condition.
The British embassy was among several foreign missions closed on Friday.
At least seven people were killed on Friday and a demonstrator was shot dead on Thursday night.
More than 100 people have been wounded, reports quoting hospital sources say.
Broadcaster France 24 said its Canadian-born TV reporter Nelson Rand had been hit in the leg, hand and abdomen. He has undergone surgery and is said to be recovering.
A Thai cameraman from the VoiceTV news website and a photographer for the Thai newspaper Matichon were both shot in the legs, their news outlets said.
Residents fled as gunfire rang out when thousands of soldiers moved in to seal off access to the protesters' camp.
The troops advanced on hundreds of demonstrators who had set up a checkpoint outside the Suan Lum night market, popular with tourists, to stop soldiers approaching their main base.
A government spokesman, Panitan Wattanayagorn, told the BBC's World Today the security forces were not trying to storm the barricades.
"We want to cut down a number of activities including the logistics, sending in the fuel and gasoline trucks," he said.
Later, in a televised address, he said it was hoped the situation would return to normal in the "next few days".
'Tightening the noose'
Thousands of protesters, including women and children, have reinforced their bamboo barricades and vowed to maintain their sprawling camp in a commercial district of Bangkok.
"They are tightening a noose on us but we will fight to the end, brothers and sisters," one protest leader, Nattawut Saikua, told a cheering crowd, reports news agency Reuters.
Guards were seen at the sprawling protest site armed with slingshots and arrows.
The authorities have also begun to cut public transport and some mobile phone services to the area occupied by the protesters, most of whom are rural poor.
With their own supplies of water and food, the demonstrators appear braced for a long siege, says our correspondent.
Briton Robert Haydock has been watching part of the stand-off from the balcony of his home in the city.
He said soldiers were advancing and then retreating on Ratchaprarop Road, close to the Ratchaprasong protesters' camp.
"I have seen soldiers clear streets by firing automatic weapons in response to red-shirt supporters throwing various objects at them including Molotovs (petrol bombs).
"There has been a number of big explosions and helicopters are flying overhead."
Who shot Red?
The latest clashes come a day after rogue Thai General Khattiya Sawasdipol, better known as Seh Daeng (Commander Red), was shot in the head. He has been organising the red-shirts' security.
14 Mar: Red-shirts converge on Bangkok, hold first big rally, occupy government district
16 Mar: Protesters splash their own blood at Government House
30 Mar: A round of talks with the government ends in deadlock
3 Apr: Red-shirts occupy Bangkok shopping district
7 Apr: PM Abhisit orders state of emergency
10 Apr: Troops try to clear protesters; 25 people are killed and hundreds injured
22 Apr: Grenade blasts kill one and injure 85 near protest hub; each side blames the other
28 Apr: Policeman shot in clashes in northern Bangkok
Seh Daeng is in a Bangkok intensive care unit with a low chance of survival, a hospital official told AFP news agency.
He is part of the protesters' more radical wing and had accused red-shirt leaders - many of whom have distanced themselves from him - of not being hard-line enough.
A New York Times journalist, Thomas Fuller, was interviewing the general at the moment the shot rang out near the Silom business area.
The reporter told the BBC's World Today: "He immediately dropped to the ground, his eyes were open but he was expressionless and his body wasn't moving at all."
A spokesman for the red-shirt movement blamed an army sniper but military officials said troops had orders to fire only in self-defence.
The protesters - who have been occupying parts of Bangkok for more than two months - want Prime Minister Abhisit Vejjajiva to dissolve parliament and call fresh elections.
He had offered polls in November - but the two sides failed to agree a deal because of divisions over who should be held accountable for a deadly crackdown on protests last month.
Mr Thaksin has called on the government to withdraw troops and restart negotiations.
In a statement on Friday he said the government's actions constituted "grave infringement of human rights and criminal offences".
Thailand's worst political unrest in nearly two decades has left at least 30 people dead and more than 1,400 wounded.
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