State Department spokesman Sean McCormack withheld formal comment on the reports that Thailand's ruling junta had selected retired general Surayud Chulanont,63, to replace Thaksin pending confirmation of the appointment.

"But certainly somebody with close ties to the military is going to have to at least overcome the perception that they are maintaining a close relationship with the military and may be not acting in defense of Thai democracy," McCormack said.

Thaksin was toppled by the military on September 19 as he was attending the UN General Assembly in New York.

The junta pledged to appoint a new premier within two weeks to guide Thailand towards elections in October 2007.

State-run Thai radio and other media reported Friday that the military had chosen Surayud, an advisor to the king, as prime minister and that the appointment would be announced on Sunday.

But a military source in Bangkok challenged the report, saying Surayud had turned down the job.

Another possible prime ministerial candidate was former World Trade Organization chief and current head of the UN Conference on Trade and Development, Supachai Panitchpakdi.

The United States condemned the coup and on Thursday announced the suspension of nearly 24 million dollars in aid to the Thai military, as required by US law.

McCormack said the United States continued to watch developments in Thailand "very closely: Who is appointed as prime minister, that person's background, the policies that they pursue."

"We certainly hope that that person is somebody who has the deep interests of Thai democracy at heart and who not only abides by the principles of democracy but acts in their defense in getting Thailand back on the pathway to democracy as quickly as possible," he said.

Agence France Presse