Thailand's Army Commander-in-Chief who led a bloodless coup d'etat on Tuesday night and dismissed Prime Minister Thaksin Shinawatra while the premier was in New York, said Wednesday the coup was necessary to reunite the kingdom and vowed to return power to the people soon.

While meeting with foreign diplomats a few hours earlier, General Sonthi Boonyaratglin, who is also the leader of the Administrative Reform Council, said a civilian government would be appointed to run the country within two weeks. He also told a gathering of foreign diplomats and press at the Royal Thai Army Headquarters that the Constitution would be amended for a swift return to democracy through a national election.

In a separate session with media following his meeting with the envoys, Sonthi told reporters that the decision to launch the coup was taken two days ago, but stressed that the idea was discussed for sometime.

Flanked by the three armed forces chiefs and the head of the national police force, Sonthi said in a televised address to the nation early Wednesday that the coup was necessary to bring back unity to the country which had become deeply divided under the Thaksin's administration.

It is Thailand's first coup attempt in 15 years. There were 19 military interventions, or attempts to change the government of the day, in the nearly 60 years between 1932 and 1991.

The army chief reemphasised that the Administrative Reform Council carried out the coup to end the serious rift in society, rampant corruption, activities deemed 'lese majeste' to His Majesty the King, and interference in the work of independent organisations. The Administrative Reform Council is comprised of the commanders of the three armed forces and the national police chief.

"We have done it due to requests from many quarters. There are aspirations for systematic and proper democratic development," a diplomatic source quoted him as saying.

The English-language newspaper The Nation's website reported that Gen Sonthi was asked by a British diplomat what action would be taken against the ousted government including Thaksin Shinawatra. Sonthi said Thaksin and members of his Cabinet can return to the country. He added that they have done no wrong.

The report also quoted Gen Sonthi as saying that Thailand was and still is a democracy and that tourists can continue to visit the country.

Diplomats appeared calm at the political situation and most were adopting a wait and watch attitude.

It is unclear whether the ousted prime minister intends to return home. He is preparing to leave the United States, apparently for London [Images], the Thai ambassador to Washington said. Although he boldly stated he will return to Thailand, his actual plans are unknown.

Tom Kruesopon, a member of Thaksin's Thai Rak Thai party, said, "The prime minister has not given up his power. He is not seeking asylum."

DPA news agency reported from Bangkok, that family and close friends of Thaksin had fled the country by the time a military clique staged a coup Tuesday night.

Troops were seen Wednesday morning at the capital's main intersections and stationed outside government buildings. Soldiers were also posted at the Bangkok port and the capital's Don Muang International Airport.

Thaksin's wife Pojaman, who manages his fortune, flew to Singapore Monday night with her son. Sudarat Keyuraphan, one of Thaksin's closest allies, has flown to Paris. Other cabinet ministers left the country on Tuesday.

Thaksin has been at the centre of Thailand's months-long political crisis after marathon street protests since March to pressure him to resign amid allegations of corruption and abuse of power.

His policy towards the simmering insurgency in the deep south, which has claimed more than 1,700 lives since it erupted in January 2004, has been blamed for intensified violence.

Meanwhile, a member of the Thai Rak Thai party was arrested for protesting against the coup at the Democracy Monument. He was taken away by soldiers.

Declaring Wednesday a national holiday, the coup leaders ordered senior civil servants, university rectors and state enterprise officials to meet at military headquarters.

Government offices, the stock exchange and banks were ordered to close on Wednesday. However, all micro-branches of commercial banks were open in shopping malls and department stores throughout Bangkok.

The permanent secretary for education Kkhunying Kasama Worawan said Wednesday that schools will resume classes on Thursday. But each school administration is allowed to use its own judgement to consider whether to remain closed.

Though businesses were closed for the day, there seemed to be no signs of any major response to the coup. Tourist areas were doing business, though on a much smaller and quieter scale than normal.

Indian business man Nitin Dhavale, who runs a diamond firm, says he was upset with the holiday. "I have so much work to do and this holiday has not helped, since most businesses and jewellery shops are closed. I hope this ends soon, we are losing a lot of money."

A naturalised Thai, who requested anonmity, and who has lived in Thailand for over 30 years is unfazed by the current scenario. "I have witnessed some five coups since I came to Thailand. Life goes on as usual. Since this was a bloodless coup, it will end soon and fast. It would help if Thaksin did not return. The process of reform will be smoother."

Meanwhile, the domestic and international airports, airline services and airport transfers are operating normally in Bangkok and throughout the country. Road traffic in Bangkok is about 50 percent of normal density. Some tour operators cancelled or adjusted tour itineraries that would have gone near Government House and the Rattanakosin sector of Bangkok, where most government offices are. Tour operators expect to resume normal tours on Thursday.