Thai Prime Minister Abhisit Vejjajiva has rejected an ultimatum by protesters to dissolve parliament, as they marched on military barracks sheltering the government.
Demonstrators loyal to ousted leader Thaksin Shinawatra, have demanded the current PM call new elections or face further protests.
The move has prompted military officials to boost troop numbers and put evacuation plans in place.
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The Red Shirts, who stem largely from the country's poor and support the populist Thaksin, had predicted a "million man march" but said more than 100,000 protesters turned up on Sunday, while police said there were 80,000.
Protesters en route
Nattawut said most of the rally crowd would travel by bus, car and on foot at 9am (1300 AEDT) to the barracks on Bangkok's northern outskirts, where the government has mounted a security operation with soldiers and police.
An army spokesman said security had been beefed up with hundreds of extra troops at the barracks, where Abhisit and other key ministers along with the country's top brass were staying during the protests.
Deputy Prime Minister Suthep Thaugsuban, in charge of the country's security, said the protesters would be permitted to approach the barracks.
Protests allowed, but can't obstruct traffic
"Protesters can circle the barracks but they must not obstruct traffic or intrude into the barracks or they will be arrested," Suthep told reporters.
He said it was too early to say if emergency rule would be invoked to crack down on the rally.
"We have to see how the situation develops but I reaffirm that we will act reasonably and appropriately."
Security force deployed
Authorities have deployed a 50,000-strong security force across Bangkok and surrounds to oversee the rallies, and invoked a strict security law that allows them to call out troops, ban gatherings and impose curfews.
The rallies come two weeks after Thailand's top court confiscated $US1.4 billion ($A1.53 billion) of Thaksin's assets, and are the latest chapter in political turmoil that began when he was toppled in a 2006 coup.
Twice-elected Thaksin, who has been living mostly in Dubai to escape a two-year jail term for corruption at home, is now in Europe and was due to address the rally crowd by video link late on Sunday.
He has been egging on his supporters for months via text message and on his Twitter page.
Protesters arrived by road and river throughout the day at Bangkok's historic quarter, where the crowd remained in jubilant spirits, waving red flags and foot-shaped clappers.
Some, wearing red cowboy hats as a sign of their rural roots, had travelled for up to two days by pick-up truck and bus to reach the venue.
"This government says it will help but the money never reaches the people," said food vendor Soon Boonpha, 47, who came from Maha Sarakham province in Thailand's northeast.
