As Prayuth spoke, tens of thousands of protesters marched towards his office at Government House to demand his resignation
Thai Prime Minister Prayuth Chan-ocha said on Wednesday he was preparing to lift emergency measures imposed last week to stop protests in Bangkok and that disputes should be settled in parliament.
The emergency measures from last Thursday prompted demonstrations by tens of thousands of people, the biggest in three months of rallies to demand Prayuth's removal and reforms to curb the powers of King Maha Vajiralongkorn.
"I will make the first move to de-escalate this situation. I am currently preparing to lift the state of severe emergency in Bangkok and will do so promptly if there are no violent incidents," he said in an address to the nation.
The measures had banned political gatherings of five or more people and the publication of information deemed to threaten security.
"We must now step back from the edge of the slippery slope that can easily slide to chaos," Prayuth added.
The protests have become the biggest challenge to Thailand's establishment in years and have drawn the most open opposition to the monarchy in decades despite lese majeste laws setting jail terms of up to 15 years for insulting royalty.
As Prayuth spoke, tens of thousands of protesters marched towards his office at Government House to demand his resignation as well as the lifting of the emergency measures and release of dozens of activists arrested in a crackdown.
"It's not enough. He must resign," said Too, 54, one of the marchers.
Protesters say Prayuth engineered an election last year to keep hold of power he seized in a 2014 coup. He says the election was fair.
The other demands of protesters are for a new constitution and for reforms to a monarch they say has enabled years of military domination.
The palace has a policy of making no comment to media.
In his speech, Prayuth said disputes should be resolved in parliament. His supporters are in the majority, the entire upper house having been appointed by his former junta.
"The protesters have made their voices and views heard," Prayuth said. "It is now time for them to let their views be reconciled with the views of other segments of Thai society."
Scores of Thai royalists and anti-government protesters earlier confronted each other at Ramkhamhaeng University.
The yellow-shirted royalists advanced on student protesters and the two sides shouted abuse at each other. Some threw water bottles and other objects before the students pulled back and police stepped in to separate the sides.