Allies of Thaksin Shinawatra, who was deposed last year, won the most seats in weekend elections, dealing a blow to the military that had sought to rid the nation of his political legacy.

"Political problems must be solved by politics - the military will only keep watch from a distance, although nobody wants to witness clashes of people," General Boonrawd Somtas said.

"The duty of the military is finished and next it's the duty of political parties to set up government - the military will not interfere." But he added: "I cannot guarantee that there will not be a coup in 2008, just like I cannot rule out a natural disaster."

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The generals who seized power 15 months ago have so far been tight- lipped about the electoral success of their foes.

Coup leader General Sonthi Boonyaratglin said only that he would press ahead with corruption investigations into the former government.

People Power Party, which is widely seen as Thaksin's proxy party, won 233 of 480 seats, just short of the absolute majority needed to govern alone.

PPP spokesman Kudep Saikrajang said yesterday it has reached agreement with smaller outfits, and so far a coalition government would have a total of 254 seats in the lower house.

Thai media has widely reported that PPP has joined forces with minor parties Rum Jai Thai Chart Pattana, Matchima Party and Pracharaj party, which between them won 21 seats.

None of them has yet confirmed whether they will join with PPP.

The Democrat Party came second in the polls with 165 seats, and has already refused to join a PPP-led government.

Thaksin said earlier this week that he planned to return home by April, but a senior official at the Attorney-General's office yesterday warned the former premier would face arrest on corruption and fraud charges.

The self-made billionaire and his wife, who have been living in exile, have two arrest warrants against them in connection with a 2003 land deal and alleged fraudulent filings to the Securities and Exchange Commission.

AGENCE FRANCE-PRESSE