Risks
General Prayuth said he had imposed martial law to restore order, and the caretaker government says it is still running the country.
"Certainly, it's not an outright military coup by definition because the caretaker government is still in office, but on the ground it looks like the military is in charge," said Thitinan Pongsudhirak, a political analyst at Chulalongkorn University.
He said Prayuth needed to convince everyone with a stake in the outcome of the need for "reforms before and after elections".
"He's taking a lot of risk, Prayuth, because the imposition of martial law puts him in a very tight spot ... The longer we do not see a resolution, the riskier it will become for the army," Thitinan said.
The United States, which cut aid to its military ally after Thaksin was toppled in the most recent of Thailand's frequent military coups in 2006, called on the army to respect "democratic principles."
"We're watching the situation very closely. We expect that the Thai army will be true to its word when it says that this is not a coup and this is just a temporary injunction," said Pentagon spokesman Rear Admiral John Kirby.
Thaksin's "red shirt" activists have warned of trouble if the caretaker government is ousted, but some analysts saw the appointment of an interim prime minister as most likely, despite the threat of a backlash.
"With martial law in place, we believe violence could be contained," Pimpaka Nichgaroon, head of research at Thanachart Securities, wrote in a note.
The present administration has only limited authority and is unable, for example, to push through fiscal policies to support the stumbling economy.
Human rights groups have said the declaration of martial law was akin to a coup.
The army has ordered 14 satellite TV channels, both pro-and anti-government, to stop broadcasting and it has warned against the spread of inflammatory material on social media.
A bookshop in one of the city's glistening malls said it had been ordered to remove from its shelves eight books on politics.