Thailand's army chief imposed martial law Tuesday after months of deadly anti-government protests caused political paralysis, but insisted the intervention did not amount to yet another military coup.

Gun-toting troops fanned out after martial law was declared in a dawn broadcast, as General Prayut Chan-O-Cha exploited century-old legislation that confers far-reaching powers on the armed forces to act in an emergency.

But he left the caretaker civilian government in office and later invited the country's warring political factions to sit down for talks, as the United States, the EU, Japan and Southeast Asian neighbours urged Thailand to stay on a democratic track and resolve its differences peacefully.

Thailand's caretaker prime minister Niwattumrong Boonsongpaisan issued his own plea for harmony in the country, telling reporters the government wanted "peace and order to prevail in the country."

Soldiers and military vehicles were seen in the heart of the capital's retail and hotel district. Troops were also positioned at TV stations where broadcasts were suspended under sweeping censorship orders, although most residents appeared largely unfazed.

The dismissal of prime minister Yingluck Shinawatra earlier this month in a controversial court ruling has stoked tensions in the kingdom, which has endured years of political turmoil.

"Red Shirt" supporters of Yingluck and her brother Thaksin Shinawatra, who was deposed as premier in a 2006 coup, have warned of the threat of civil war if power is handed to an unelected leader, as opposition protesters demand.

Thaksin, who lives abroad to avoid a jail term for corruption, said on Twitter that the imposition of martial law was expected but must not "destroy" democracy.

The backdrop is a nearly decade-long struggle pitting a royalist establishment -- backed by parts of the military, judiciary and Bangkok-based elite -- against Thaksin's billionaire family, which has traditionally enjoyed strong support among poor and rural voters in the north.

- 'Situation not normal' -

It was not immediately clear how the intervention of the generals -- traditionally seen as staunch defenders of the monarchy -- would affect the balance in the long-running power struggle.

The government officially remained in office, and General Prayut presented himself as a mediator.

"We are in the process of inviting both sides to talk but at the minute the situation is still not normal... that's why I have had to invoke martial law," he told reporters.

"The military will not tolerate any more loss of lives."

Martial law allows the army to ban public gatherings, restrict people's movements, conduct searches, impose curfews and detain suspects for up to seven days.

Thailand has been without a fully functioning government since December, disrupting government spending, spooking investors and deterring foreign tourists.

Southeast Asia's second-biggest economy is sliding towards recession and Japan, whose companies have some of the biggest foreign investment in Thailand, also expressed "grave concerns" at the unfolding crisis.

The United States, a key ally of Thailand, urged the military to ensure freedom of speech and media, and to abide by its pledges that the move was "temporary."

"We want to see the early restitution of full democracy in Thailand and respect for Thailand's democratic institutions," Danny Russel, the assistant secretary of state for East Asia, told a congressional committee in Washington.

But the United States stopped short of stating that the military had mounted a coup, a designation that would require sanctions under US law. Human Rights Watch accused the military of a de facto coup.

UN Secretary General Ban Ki-moon in a statement urged all sides to show "utmost restraint" and avoid violence.

Niwattumrong, who replaced Yingluck, also called for fresh polls on August 3 to cut through the political quagmire, urging election authorities to help craft a decree for the king's endorsement next week.

But the protesters say they will not stomach new polls without widespread reforms to weaken Thaksin's influence on Thai politics.

- 'No need to panic' -

The early-hours announcement on military-run television said martial law had been invoked after nearly seven months of protests that have left 28 people dead and hundreds wounded.

"I think what we are looking at is a prelude to a coup. That is for sure. It is all part of a plot to create a situation of ungovernability to legitimise this move by the army," said Pavin Chachavalpongpun from the Centre for Southeast Asian Studies at Japan's Kyoto University.

Anti-government demonstrators vowed to remain on the streets.

"We will still keep fighting -- we have not won at all," their firebrand leader Suthep Thaugsuban said at a rally late Tuesday.

His movement forced the annulment of elections in February and is pressing the Thai upper chamber to invoke the constitution to dump the caretaker government and appoint a new premier.

It is unclear what legal basis they are drawing on.

Some 25 senators signed a petition Tuesday urging the interventionist Constitutional Court to move against the cabinet.

But on the streets of the capital, where a military crackdown on pro-Thaksin Red Shirts protests in 2010 under the previous government left dozens dead, life mostly went on as usual.