Using armored vehicles and firing semi-automatic weapons from an overpass, soldiers made an early morning advance on an area occupied for more than six weeks by thousands of "Red Shirt" demonstrators in Bangkok's commercial heart.
As they surrounded the main protest site, top protest leaders offered to surrender as supporters urged them to fight on, many screaming and crying as gunfire rang out nearby.
Moments later, live television showed four "Red Shirt" protest leaders in police custody and an army spokesman said in a televison broadcast the protest site was under army control and the military had halted operations.
But that didn't stop the unrest after six days of chaotic street fighting between protesters and troops that descended into urban warfare, killing 39 people and wounded 329.
Three grenades exploded outside the main protest site, badly wounding two soldiers and a foreign journalist, a Reuters witness said. Rioting was seen in five areas of the city as protesters lit fires and burned tires. Some hotels set up wooden barricades.
A curfew may be imposed in Bangkok to help restore order, the country's defense minister told reporters.
Violence also spread to northeast , a Red Shirt stronghold, where protesters stormed a town hall complex in the city of Udon Thani, setting a building ablaze, and torched a second town hall in Khon Kaen.
Three journalists were among 50 people wounded and one Western journalist, identified as an Italian, was killed.
Troops and armored vehicles broke through the protesters' three-meter-high (10 feet) barricades of tires and bamboo, and fired tear gas and automatic rifle-fire at the protesters.
Two bodies were found on Ratchadamri Road, which leads to the main protest site after troops followed the army vehicle into the encampment, a Reuters witness said. They appeared to have been shot. The "Red Shirts" fired back, witnesses said.
Protesters ignited walls of tires as the troops arrived, causing thick black smoke to billow high over skyscrapers and hiding thousands of demonstrators who have occupied the heart of Bangkok's commercial district for more than six weeks.
The mostly rural and urban poor protesters broadly support former Prime Minister Thaksin Shinawatra, a graft-convicted populist billionaire ousted in a 2006 coup and living in self-imposed exile to avoid jail.
Thaksin raised the specter of insurrection in a telephone interview with Reuters on Wednesday. "There is a theory saying a military crackdown can spread resentment and these resentful people will become guerrillas," he said, but declined to say where he was speaking from.
He denied an accusation by a top aide of Prime Minister Abhisit Vejjajiva that he was the stumbling block for failed talks between the government and the "Red Shirt" leaders.
The military offensive came a day after the collapse of a proposal for talks aimed at ending five days of chaotic street fighting that descended into urban warfare that killed 39 people and wounded more than 300.
Several buildings were on fire on the periphery of the protest encampment, and tires were set ablaze are various other spots in the city of 15 million people and a popular tourist destination.
The Red Shirts accuse the British-born, Oxford-educated Abhisit of lacking a popular mandate after coming to power in a controversial parliamentary vote in 2008 with tacit backing from the military. They have demanded immediate elections.
Troops over the past few days had thrown a cordon around the protest site, a "tent city" at the Rachaprasong intersection, paralyzing the heart of Bangkok. Hundreds of women and children have taken refuge in a temple inside the protest area.
Protesters have stockpiled food, water, and supplies in the encampment since Thursday when the assassination of a major-general allied to the red shirts, and an army operation to pressure them, sparked the latest wave of violence that has killed 68 people and wounded more than 1,700 since the demonstrations began in mid-March.
