Who are the two sides?
The anti-government protesters are a disparate group, united by their opposition to Mr Thaksin.
They are being led by Suthep Thaugsuban, a former deputy prime minister who resigned from the opposition Democrat Party to lead the rallies.
The protesters say the Pheu Thai government has been buying votes with irresponsible spending pledges, aimed purely to bolster its support base, and thereby creating a flawed democracy.
They want the government dissolved and an interim administration appointed to oversee political reform.
In contrast, the red shirts have been largely supportive of the government's policies, and have warned that they will turn out in large numbers if the government they elected is forced from office.
They have held a number of rallies, but have for the most part remained off the streets.
Observers fear that if they were to decide to protest again, an escalation in violence would follow.
The red shirt leader, Jatuporn Prompan, has said his group could accept martial law, but "would not tolerate a coup or other non-constitutional means" to take power.