Thousands of anti-government protesters in Bangkok today forced parliament to shut down and a group of riot police to retreat in what activists called their "final showdown" to oust a corrupt administration.

Parliament postponed a joint session of both houses after singing and dancing protesters wearing yellow shirts in dedication to Thailand's monarch surrounded its gates and reportedly cut electricity to the building.

Riot police barricaded the parliament with metal barriers and stood guard inside the compound.

Nearby, dozens of police in riot gear retreated inside Bangkok's police headquarters as several hundred protesters pushed past a metal barricade and blocked off the street with razor wire. Rallies were staged at the finance ministry and other key offices.

The People's Alliance for Democracy has occupied the grounds of the prime minister's office for three months, virtually paralysing the government, which they allege is the puppet of the former prime minister Thaksin Shinawatra.

Protesters accuse Thaksin, who was ousted by a 2006 military coup, of corruption and abuse of power. Thaksin is in exile, a fugitive from a two-year jail term imposed after he was convicted last month of violating a conflict of interest law.

Today's protest was not the first time the alliance has called for a final showdown with the government, but it was spread across a wider area of the capital than earlier rallies. Protest leaders say their goal is to stop the government from functioning.

"One mission has been accomplished. We have won our victory here," a protest leader, Somsak Kosaisuk, said outside parliament. "We'll keep doing this until they quit."

He called on protesters to move on to the government's makeshift office at Bangkok's old international airport to interrupt a cabinet meeting.

The protesters want the current prime minister, Somchai Wongsawat, who is Thaksin's brother-in-law, to resign. Somchai was in Peru for a summit of Pacific Rim leaders and is expected to return midweek. The house speaker, Chai Chidchob, said the parliamentary session would be rescheduled "when the situation returns to normal".

The demonstrators initially called the protest to block parliament from debating a bill to rewrite the constitution, a measure they said would help Thaksin stage a comeback.

Riot police armed with shields and batons were under orders to use "as little force as possible" and to try to avoid tear gas, said the Bangkok police chief, Lieutenant General Suchart Maunkaew. He said police were not carrying guns.

The last time the group marched on parliament, police efforts to disperse them resulted in running street battles. Two people were killed and hundreds injured in the October 7 violence.

The alliance has accused police of being behind an attack last week in which grenades killed two protesters during demonstrations at and near the occupied Government House. Authorities have denied the charge.

Alliance supporters are largely middle-class citizens who say Thailand's electoral system is susceptible to vote-buying and that the rural majority, the Thaksin camp's power base, is not sophisticated enough to cast ballots responsibly.

They propose replacing an elected parliament with one that is mostly appointed, a move that critics see as a way to keep power in the hands of the educated, urban elite.