UPDATE: 9am State of Emergency declared. BBC:

"Because last night there was unrest affecting the peaceful law and order in the country and obstructing the democratic process, the government has declared a state of emergency, which will affect people's individual freedoms," an announcement on state radio said.

The best report I have seen is from Nirmal of the Strait Times:

THAI Prime Minister Samak Sundaravej declared a state of emergency in Bangkok on Tuesday, state radio announced, hours after clashes between opponents and supporters of his government left one dead.

Mr Samak appointed the powerful army commander General Anupong Paojinda as chief of a new team tasked with enforcing the emergency decree, with Bangkok's police chief and the capital's regional army commander as his deputies.

Early on Tuesday morning, the weeks of tension and huge gulf between the Bangkok elites and upcountry rural Thailand erupted into a pitched battle on Rajadamnoen Avenue in the heart of historic Bangkok.

Some 5,000 pro-government protestors who had been pouring into Bangkok all day, at around midnight began marching up Rajadamnoen Avenue towards Makkawan bridge.

The PAD which has been occupying Government House located just beyond the bridge, lay in wait behind barricades.

The mood in the PAD camp was serious and businesslike. All the men at the barrier wore helmets and carried baseball bats. Some had slingshots. From a distance, the sound of the pro-government crowd could be heard as they approached.

The pro-government crowd, many wearing red shirts and red headbands, marched quickly towards the Makkawan bridge and was met by a double row of police in full riot protection gear but without batons. In less than five minutes the police allowed the crowd through.

Minutes later at about 1.20am the police simply walked away and watched from a distance as the almost medieval battle erupted.

Some in the crowd, armed with two by fours and rods and slingshots, began to run towards the PAD's sparsely guarded outer perimeter. The PAD guards manning the perimeter ran and the crowd chased them, throwing aside metal barriers. The men were screaming with rage as they ran at the PAD. One car window was broken and the pro-government crowd roared.

But as the few dozen young men in the vanguard of the pro-government crowd neared the PAD just after 1am, the close ranks of the PAD suddenly roared and came running out in a full charge, plowing into the pro-government crowd who were totally outnumbered and ill equipped to defend against the charge.

Simultaneously a volley of gunfire erupted from the PAD, and at least one pro-government protestor fell immediately, eyewitnesses from the pro-government group said. But Thai media reported that a PAD member had been killed.

Another report quoted a hospital source saying that the man was from Nakorn Ratchasima in the north east - where most of the pro-government crowd was from.

A pitched battle ensued where the two rival mobs met, with many at the rear of the pro-government crowd running helter skelter as they realised the PAD had the upper hand and heard the gunshots.

After an initial shot, more shots were heard at random intervals as the struggle surged back and forth for about two or three minutes.

The shots were clearly coming from the PAD ranks. Bullets zinged into the trees above me and another journalist from Bloomberg; we were the only foreign journalists there.

One of the bullets cut down a branch.

Later two bullet marks were found on the tree, and one bullet on the ground. At the burst of shots I shouted 'bullet' and we both ducked and ran with the crowd, which was climbing over walls and trying to break into nearby buildings to get away.

The situation calmed momentarily then.

An injured man was carried away to the rear of the crowd, blood pouring from his leg.

Ambulances appeared with sirens howling and raced to the site of the riot taking some of the injured to hospitals.

At least 5 ambulances took away the injured, estimated by some sources at between 25 and 35. More ambulances were standing by.

The street strewn with rubble from the battle.

The pro-government crowd appeared stunned at being shot at by the PAD. 'We brought sticks and knives to a gunfight,' one man said. Several women sat on the sidewalk with their heads in their hands.

The PAD has advanced several metres and now massed in the street in a show of strength, facing down the pro-government crowd.

A man on top of a truck in the pro-government crowd screamed into a microphone urging the men not to back off. 'More of us are coming,' he screamed.

He also shouted 'No one is above the law' referring to the arrest warrants issued against the five PAD leaders and four other key PAD people - who have all been avoiding arrest by staying inside their crowd of 10,000 odd in Government House.

At 1.30am a second wave of a few dozen pro-government supporters armed with two by fours and swords and other assorted weapons appeared.

This time, the police intervened, forming a line across the road between the two warring sides. Police officers shouted at the crowds to stand down.

A volatile calm followed as more ambulances arrived and ferried away the wounded.

The pro-government crowd screamed over the police at the PAD.

'Tomorrow we will bring many more people,' one pro-government protestor said.

The crowd had come from all over the north east and northern provinces, strongholds of the ruling People Power Party (PPP).

'I hate the PAD,' one man shouted. Another yelled 'We love Thaksin.'

A middle aged woman said, 'Today we are going to kill Suriyasai Katasila.'

Mr Chaoalit Sainaamkiew, 56, told The Straits Times, 'The PAD want to force the army to come out. Us Thais don't want to fight, but they want to force out a prime minister who had been elected by us.'

Another man who asked not to be named, said 'The legal process hasn't worked. The supposed negotiations in parliament didn't work. So there's nothing else to do but this. When the legal system and civilised debate fails, we have to go back to being barbarians. It is sad to see this happening in Thailand.'

'They (the pro-government protestors) feel this has been going on long enough, the PAD is holding the country to ransom. There will be a bloodbath if this carries on, not today but within two or three days. We are expecting 40,000 people.'

He said it was possible the pro-government protestors were 'set up' because their intention had been to establish tents and a picket line up close to the PAD line, and had been told the police would be there to separate the two.

But there were no police, leaving the pro-government men open to the PAD's murderous charge.

'This has been going on for years. The issue is the ruling elites won't let Thai people share the wealth of the country.'

At around 2.45am over 100 soldiers arrived with riot control gear and no weapons. An army source confirmed on the phone that the army was not on alert, but four companies of riot control soldiers had been sent out. The men in camouflage fatigues and holding riot shields fell in to support the police at around 2.45am.

Big trucks then started appearing, carrying tent poles and canvas and stacked with cases of drinking water for the pro-government crowd.

By 3.30am the chance of another clash appeared to have diminished, but the mood remained dangerously volatile. One pro-government protestor was seen pinning a print-out in Thai on a tree which read 'We have taken back Rajadamnoen.'

Last Tuesday the PAD - a coalition of royalists with significant backing from the capital's royalist-military-bureaucratic elite, and from wealthy business families, invaded a government TV station, shut down three airports in the south disrupting over 15,000 travellers for two days, and overran and occupied Government House.

The PAD is demanding that prime minister Samak Sundaravej and his Cabinet who they say are corrupt puppets of former premier Thaksin Shinawatra, resign.

Mr Samak has refused to do so, insisting that as an elected prime minister he will not cave in to a minority.

But the situation has been locked in a deepening stalemate, which broke last night in the mayhem on Rajadamnoen.

BP: According to Suriyasai of PAD it was UDD/DAAD who had the guns, but from Nirmal's report you can see it is PAD - the TV images seemed to show it was people in "red" (UDD/DAAD) colours who sustained more injuries. It seems clear that UDD/DAAD wanted a clash to end the Government House occupation.

AP and AFP also have articles.

Now, what will happen?

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There are clashes on the street between PAD and UDD/DAAD about an hour or so ago near Ratchadamonern and Makawan Bridge. There is talk of guns. Channel 3 reports that one UDD/DAAD was reported to be shot. No one who started it or who attacked who first - expect both sides to blame each other. PAD seem to be distinguishable as they have motorcyle helmets, yellow shirts, and sticks. UDD/DAAD are not so well-prepared, but do have some sticks and red clothing. They also had some motorcycles.

From what I can gather from the PAD side is that they heard the UDD/DAAD were going towards Government House and so intercepted them at Rachadamnern Road. UDD/DAAD don't have their own media network so not sure what they have to say.

One can see half a dozen people lying on the street whose bodies are bloodied - they don't appear to be dead.

NOTE: The police don't appear to be anywhere at the tme of the violence, but then again to be honest I don't blame them as there were hundreds of people on the street with weapons. If they do anything, they will have used "force" and they will be castigated by the media for doing so. Now, they seem to be separated by about 200 metres and 1,000 police.

NOTE: As is typical with TV broadcasts, we see the presenter speaking and immediately behind them are half a dozen supporters of either PAD or UDD/DAAD. The current reporter has PAD supporters with helmets on. One could speculate that this affects coverage....