Prime Minister Samak Sundaravej called emergency rule the "softest means available" for restoring calm. In a nationally televised news conference, he gave no timeframe for how long the decree would stay in effect but said it would be over "moderately quickly."
In Thailand, a state of emergency allows the use of military forces in policing activities, and suspends certain civil liberties. People are banned from gathering in groups of more than five people, media is barred from reporting news deemed likely to panic the public or instigate violence and police are allowed to detain people without charge for 30 days with court approval.
Samak, who said last week he had hoped to avoid the need for an emergency, said today that he was left with little choice after violence erupted.
"I did it to solve the problems of the country," he said. "Because the situation turned out this way, I had no other choice."
A week of political tension exploded into street clashes early today between protesters seeking to topple Samak and mobs of his supporters.
The violence heightened a national crisis sparked when People's Alliance for Democracy protesters occupied the prime minister's office compound Aug. 26 and vowed not to budge until Samak stepped down.
About 500 Samak supporters marched through the streets early Tuesday vowing to retake the office compound. Young men armed with sticks, slingshots and other makeshift weapons chased each other up and down boulevards, beating anyone they could catch. Reporters saw at least one man aiming and firing a pistol at a group of people.
The mob scuffled with police about halfway to the Government House complex, then clashed with alliance members with most of the fighting taking place near the Asian headquarters of the United Nations.
Police were unable to stop the fighting, which eased up only after army troops with riot gear - but no guns - reached the scene.
"The police tried their best," Bangkok police chief Gen. Jongrak Jutanond said. "We were armed with nothing but shields so there was only so much we could do."
Jongrak had ordered riot police to carry only shields and no batons in hopes of deterring violence. By sunrise, Jongrak said "the situation is now under control."
The number of army troops in the area increased by daybreak, outnumbering police on the scene.
"The army has sent in anti-riot troops to help the police but they would only be armed with batons and shields," Anupong said in a telephone interview with Thai television station TPBS.
The pro- and anti-government activists retreated to their respective protest sites, about 1 kilometre apart, keeping the area a flashpoint for further trouble.
One person died from severe head injuries and four others were in serious condition, two with gunshot wounds, Dr. Petchapon Kumtonkitjakarn of the Erawan Medical Center told The Associated Press. He said 38 people were being treated for injuries at several hospitals.
The identities of the victims were not immediately clear.
The People's Alliance for Democracy accuses Samak's government of corruption and of serving as a proxy for ex-Prime Minister Thaksin Shinawatra, who was ousted in a 2006 military coup. Thaksin recently fled to Britain to escape an array of corruption charges.
On Monday, the alliance announced that their supporters in state enterprise unions would cut off water, electricity and phone service to government offices as part of a "general strike" set for Wednesday.
Alliance supporters said they also would delay departures of flights of the national airline. They are already disrupting rail service and plan to cut back public bus transportation as well.
Samak has repeatedly said he would not be bullied by a mob into resigning or dissolving parliament and calling a new election.
Since beginning its occupation of the Government House compound, the People's Alliance has tried to block streets in the capital with as many as 30,000 supporters, according to an early government estimate.
