Major-General Khattiya Sawasdipol, better known as Seh Daeng or "commander red", was accused by the government of being a renegade soldier and creating a paramilitary force for the so-called red shirt protesters.
His death, reported on Monday by the Vajira hospital in Bangkok where he was being treated, came after he was shot in the head - reportedly by a sniper - while talking to journalists inside the perimeter of the protest zone on Thursday.
That incident sparked the latest flare-up in violence between troops and the red shirts.
Al Jazeera's Aela Callan, reporting from the Thai capital, said while his death could inflame the emotions of hardcore protesters, it would probably be a blow to the morale of most of the red shirts.
Khattiya's death comes as the stand-off between troops and anti-government protesters continues in Bangkok.
The government has rejected a call by the red shirts for UN-mediated talks.
Protests to continue
Al Jazeera's Tony Birtley, also reporting from Bangkok on Monday morning, said red shirts he had spoken to were insisting that they would continue their protests despite the deadly clashes with the military.
There was a lot of firing of weapons and some explosions overnight in certain areas of the city, our correspondents on the ground said.
Reuters Picture: Khattiya Sawasdipol cries and holds up a cap of her father, renegade Thai major-general Khattiya Sawasdipol, at a hospital in Bangkok May 17, 2010. A rogue soldier and de facto military chief of Thailand's red shirt protest movement has died, said the director of the hospital where he was being treated after an assassination attempt. Khattiya Sawasdipol, better known as Seh Daeng, was shot in the head on Thursday in an incident that sparked the latest flare-up in violence in Bangkok.Besides Khattiya, two people were reported killed overnight, bringing the number of dead from street battles since Thursday to 36, according to emergency services and local media. At least 244 have also been wounded in the past four days.
In the early hours of Monday morning, guests at Bangkok's Dusit Thani hotel, which overlooks the red shirts' encampment, were evacuated to the basement after the building came under gunfire and was rattled by an explosion.
Guests were later allowed back to their rooms but the hotel said in the morning that it was closing for fear of more attacks.
Fire gutted three commercial buildings in another area and Australia became the latest country to shut its embassy due to the "ongoing violent clashes", after the US and Britain closed theirs.
A total of 65 people have died and more than 1,600 have been injured in the two months of protests in Thailand, according to government figures.
The government gave protesters, especially women and children, up to 3pm (08:00 GMT) on Monday to leave their vast protest area, saying they would provide buses to take them home if they left voluntarily.
"Men can also leave the site but they have to show they are unarmed," Colonel Sunsern Kaewkumnerd, a spokesman for the military, told reporters.
Those who remained beyond the deadline, the government said, would face up to two years in prison.
Our correspondents said the protesters do not trust the government and fear they will be arrested if they get on the buses. There are also fears that the move to get the women, children and elderly to leave is a precursor to an all out assault on the protest site.
Protest leaders told women and children with them to move to a Buddhist temple compound within their protest zone on Sunday.
Protesters' demands
The red shirts said on Sunday that they were ready to enter peace talks with the government immediately, but with the caveat that the UN must mediate.
"We want the UN because we don't trust we will receive justice from organisations in Thailand," Nattawut Saikuar, a protest leader, said.
"What's urgent is to stop the deaths of people. Political demands can wait," he said.
Sean Boonpracong, a red shirt spokesman, told Al Jazeera that "the situation is deteriorating to a point that if the government is smart, it's best they call off the dogs and push the army back to the base - it's getting to be a civil war".
"I don't know how the Thai government expects to have reconciliation plans while all of us are being taken prisoner".
Sean said, however, that the red shirts were "not closing the door to peace".
But the government rejected the demand for UN-mediated talks, with Panitan Wattanayagorn, the official spokesman, saying "no governments allow any organisations to intervene in their internal affairs".
The crisis appeared to be near a resolution last week when the prime minister, Abhisit Vejjajiva, offered to hold elections - a year early - in November if the demonstrators left their protest area.
But hopes were dashed after red-shirt leaders made more demands and Abhisit withdrew his offer.
The authorities say they will continue their crackdown aimed at choking off the red shirts, who have occupied a roughly 3sq km protest zone barricaded by fuel-soaked tyres and bamboo spikes in Bangkok's shopping and tourist hub since early April.
Unrest spreading
Some of the worst clashes on Sunday were behind the military cordon - an indication the unrest was not contained within the protest area and was spreading.
There were also reports of scattered unrest outside the capital: a military bus was burned in the northern city of Chiang Mai and protesters demonstrated in the northeastern towns of Nongkhai and Udon Thani to defy the government's state of emergency, which bans gatherings of more than five people.
The decree, which gives the army broad powers to restore order, was extended on Sunday to 22 of Thailand's 75 provinces, up from 17.
Along with the expanded state of emergency, the government also ordered schools to remain shut on Monday and declared two days of national holidays to keep civilians off the streets.
Days of prolonged fighting and disruption to normal life have taken their toll on Bangkok's 12 million residents. Most shops, hotels and businesses near the protest area are shut and supermarkets outside the protest zone have seen long lines as people rush to stock up on supplies.
The city's two mass transit train lines remain closed and those wanting to travel in the city often have to take long detours to avoid deadly "no-go" zones.
Jatuporn Prompan, one of the red shirt leaders, urged the country's revered king to intervene in the crisis on Sunday, saying he was the "only hope" for an end to the two-month-old crisis.
In a 1992 uprising, King Bhumibol Adulyadej chastised the military and protest leaders, bringing the violence to an end. But he has so far not publicly commented directly on the ongoing crisis.
Source:Al Jazeera and agencies
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