Deputy Prime Minister Chidchai Vanasatidya's promotion yesterday to the No 2 spot in the Cabinet may signal that a major change within the caretaker government is imminent, observers said.

They said Chidchai, who oversees security, was likely to replace Thaksin Shinawatra if the embattled premier steps down amid mounting pressure from protesters, who yesterday gathered near Government House in the tens of thousands.

Previously Deputy Prime Minister Somkid Jatusripitak was second to Thaksin, and Chidchai, who is also the justice minister, was No 3.

Thaksin is closer to Chidchai, a former schoolmate at the Police Academy, than Somkid, who is also a friend of protest leader Sondhi Limthongkul.

Thaksin is said to trust Chidchai more than Somkid.

Tavorn Senniam, a deputy secretary-general of the Democrat Party, said Chidchai might come in handy to prevent Thaksin's assets from being seized if the premier had to quit for some reason. Chidchai would be the right man in that situation, Tavorn added.

Ong-art Klampaiboon, the Democrat Party spokesman, speculated Chidchai's promotion was linked to the possibility of imposing a state of emergency.

"The government's attempts to scare demonstrators by giving a signal that it is ready to declare a state of emergency, will give it power to suppress anti-government rallies," he said.

The decree would allow the government to censor any news reports it deemed "in favour" of anti-government rallies, Ong-art said.

Thaksin downplayed any political implications from the promotion of Chidchai to first deputy prime minister. He said he would be in the provinces during the election campaign and Chidchai could ensure security in Bangkok because that was among his duties, Thaksin said.

Thaksin yesterday was on a tour of the Northeast. He attended the weekly Cabinet meeting via videoconference from Ubon Ratchathani while other ministers met at Government House, which was surrounded by protesters.

Thaksin remained adamant that he would not resign yesterday.

During a campaign stop in Buri Ram last night he said he would never give up to "people who want to overthrow the government".

"I will protect democracy with my life," Thaksin said.

"If you [rural voters] elect me and a handful of Bangkok people don't accept me, will you take me to Government House again?" he asked his supporters.

In Bangkok, Chidchai dismissed speculation he was being groomed to succeed Thaksin.

"Please do not read too much into my elevation as the senior-most deputy prime minister as there are no political implications," he said.

Chidchai received Cabinet approval to act on Thaksin's behalf, should the need arise. His rank puts him ahead of six other deputy premiers: Suriya Jungrungreangkit, Somkid Jatusripitak, Suwat Liptapanlop, Surakiart Sathirathai, Suchai Charoenratanakul and Wissanu Krea-ngam.

Speculation about Chidchai's future spread as anti-Thaksin protesters moved from Sanam Luang to Government House.

Government spokesman Surapong Suebwonglee said Thaksin picked Chidchai to work on his behalf because the security situation had become a top concern ahead of the April 2 poll.

"Previously Somkid occupied the most senior position because of the priority assigned to the economy," Surapong said.

He denied a rumour that Thaksin was about to resign, saying the caretaker government would perform its duties until the next administration assumed power.

"As for Thaksin himself, he will tomorrow chair a meeting at Government House to prepare for His Majesty the King's 60th Coronation Celebrations," he said, rebutting criticism Thaksin was trying to avoid his opponents.

In regard to the possibility of a state of emergency being declared, he said Thaksin was empowered to do so but needed to get Cabinet approval within three days.

The elevation of Chidchai was not related to whether the premier would invoke the emergency decree, Surapong said.

He cited Thaksin's view on the protests, saying the government would not interfere with a peaceful demonstration as long as protesters abide by traffic rules and relevant laws.

Thaksin yesterday said he would endorse a state of emergency if anti-government protesters broke the law.

"I am ready to announce a state of emergency if it is necessary. I have a copy ready,'' he said.

The government was prepared to issue a decree because key figures during political violence in the past were participating in the anti-government rally, he said.

When asked what criteria the government would use to order a state of emergency, Thaksin said it would do so if protesters damaged property and broke the law.

But the government had assessed the situation and believed there would not be any trouble as the number of protesters outside Government House was not beyond control, he added.

"Our intelligence reports say security will be ready if there is a large enough crowd. Since there are not that many people, they dare not do anything because we have hi-tech tools to follow up the situation. We will have evidence because pictures will be taken of what happens," he said.

He sought to quell fears of a clash between anti- and pro-government demonstrators, saying he had told his supporters he is against the use of force or violence.