BANGKOK (Reuters) - Thousands of protesters marched on Thailand's seat of government on Tuesday to demand that Thai Prime Minister Abhisit Vejjajiva step down, adding to his troubles as the economy slides into recession.

Leaders of the United Front for Democracy against Dictatorship (UDD) planned a three-day siege of Government House in what appeared to be a bid to embarrass the government as it prepares to host a weekend summit of Southeast Asian leaders.

The leaders of this government have toured many countries to try to win foreign recognition, but they have learned that this is a dictatorship in disguise, UDD leader Jakrapop Penkhair told the crowd from a makeshift stage.

UDD leaders pledged not to cause trouble or storm the Government House compound, which was occupied for three months last year by the royalist People's Alliance for Democracy (PAD), a rival protest group that played a key role in the ousting of former Prime Minister Thaksin Shinawatra in a 2006 coup.

Abhisit, who led his cabinet to Hua Hin on Tuesday to inspect the summit venue, plans to return to his office on Wednesday. Some 2,000 police and soldiers armed with batons and shields guarded the compound in old Bangkok.

I still have a positive view that there won't be any violence and that we can enter to work, Deputy Prime Minister Suthep Thaugsuban told reporters.

UDD leader Jatuporn Prompan said if the police disrupted the rally at Government House, protesters would move to the summit at Hua Hin, some 200 km (125 miles) from Bangkok.

At Government House thousands of UDD protesters attempted to push through lines of riot police. Some waded through rolls of barbed wire placed to slow the marchers.

Abhisit said at Hua Hin that he and his cabinet planned to return to Government House on Wednesday even if the thousands of protesters stayed put.

There has not been any untoward incident today and there is still no change to our schedule of going to work at Government House tomorrow, the prime minister told reporters.

Asked if he would walk into his office, he said: I can walk provided the protesters are not armed or pelt us with objects.

NO ELECTION

Host Thailand canceled the Association of South East Asian Nations (ASEAN) meeting late last year after PAD activists occupied Bangkok's main airports in a street campaign that helped push the pro-Thaksin government from power.

Abhisit, who leads a shaky coalition government after winning a parliamentary vote for prime minister in December, has refused to call an election while his government struggles to revive an export-driven economy battered by the global slowdown.

The state planning agency said on Monday the economy would probably shrink in 2009, reinforcing expectations of a big Bank of Thailand interest rate cut on Wednesday.

Broadly speaking, the UDD opposes the 2006 coup that removed billionaire Thaksin, now in exile. The PAD played an integral part in the putsch that removed him, as well as the political upheaval that forced out two pro-Thaksin governments last year.

The UDD accuses Abhisit of being a stooge of the army and the PAD, a charge he denies.

It wants Abhisit to sack Foreign Minister Kasit Piromyas, who was a regular speaker at PAD rallies, and to prosecute PAD leaders for their occupation of Government House and Bangkok's two airports last year.

Analysts say the outlook for political stability remains bleak as long as there is no end to the rift between Bangkok's royalist military and business elite, who accuse Thaksin of corruption, and rural voters who loved his populist policies.

(Writing by Darren Schuettler; Editing by Alan Raybould and Sugita Katyal)

Thailand Elections