Protesters Dismiss Plan

Tavorn Seniem, a protest leader, dismissed Yingluck's proposal and said Thaksin would try to stuff the 499-member council with his own people.

"This council would work for the benefit of the government's side, not for all Thai people," he told Reuters.

Thaksin, a telecoms billionaire, was overthrown in a 2006 coup. He has lived in self-exile since 2008, when he was sentenced to a two-year jail term for graft, a conviction he calls politically motivated.

Opponents say Yingluck is merely a puppet, with Thaksin pulling the strings from his mansion in Dubai.

What has vexed many urban Thais is Thaksin's popularity among rural voters in the north and northeast, who remain loyal to him due to policies like cheap healthcare, easy credit and price guarantees for farmers.

Yingluck has been out meeting those supporters over the past week and plans to stay in the north until the New Year.

She has refused to postpone the poll, which appears uncertain after the main opposition Democrat Party declared it would boycott the vote. The Democrats have powerful backing from a Bangkok establishment of generals, bureaucrats and influential conservatives with deep disdain for Thaksin.

Thaksin's opponents tolerated Yingluck's government over its first two years but that quickly changed when her Puea Thai Party tried to push an amnesty bill through parliament in November that would have allowed him to return a free man.

The mainly peaceful anti-government protests since then have been large in number but have failed to stop the government functioning, causing concerns that other protagonists might try to create violence in the hope the military might intervene.