The Thai military says security forces plan to surround a protest encampment in Bangkok with armoured vehicles.
A spokesman said that routes into the sprawling encampment would be closed at 1800 (1100 GMT). Protesters would be free to leave but not enter, he said.
The move comes a day after the government announced and then cancelled a plan to cut off water and power supplies to the protesters.
The group have been occupying key parts of the capital since 14 March.
They want Prime Minister Abhisit Vejjajiva to dissolve parliament and call fresh elections.
He had offered polls on 14 November - but the two sides failed to agree a deal because of divisions over who should be held accountable for a deadly crackdown on protests last month.
The BBC's Rachel Harvey in Bangkok says the fear is that more blood may be spilled before this crisis is brought to an end.
'Restore normalcy'
The military urged businesses around the protest camp to close by 1800 and stay shut.
"The authorities will seal off the protest area at all routes at 6 p.m. today with armoured personnel vehicles. No one would be allowed in," a spokesman, Colonel Sunsern Kaewkumnerd, said.
The camp stretches from Bangkok's shopping hub south to the business district. Protesters have built large barricades from tyres and bamboo, behind which they have stockpiled food supplies and generators.
The military's announcement comes as hopes of a political solution to the crisis fade.
Mr Abhisit told journalists that he had withdrawn his offer of early elections in November.
"I have cancelled the election date... because protesters refuse to disperse," he said. "I have told security officials to restore normalcy as soon as possible."
A few days ago a deal had appeared within reach. But protest leaders demanded that charges be laid again the deputy Prime Minister Suthep Thaugsuban over the 10 April crackdown.
Mr Suthep oversaw the failed operation to clear protesters which left 19 protesters, one journalist and five soldiers dead.
Ahead of the military's announcement red-shirt leaders appeared defiant.
"We urge that our supporters come and help us here because the more people we have, the harder it is for them to hurt us," Nattawut Saikua, a protest leader, told a cheering crowd.
"We are ready for any attempt to forcibly disperse us. Our guards are ready to protect the site."
The protesters are a loose coalition of left-wing activists, democracy campaigners and supporters of ousted former Prime Minister Thaksin Shinawatra.
They say the government is illegitimate because it came to power through a parliamentary deal rather than an election.
BBC NEWS: http://news.bbc.co.uk/2/hi/asia-pacific/8679218.stm
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