Cambodian military officials earlier said that the Thai soldiers had moved out of the contentious area near the ancient Preah Vihear temple, after Cambodian Prime Minister Hun Sen issued an ultimatum.
"All 80 troops will remain in the disputed area because Thailand has overseen that area for 20 to 30 years," Thai Foreign Minister Sompong Amornviwat told reporters.
"Of those 80 troops, 20 of them are mine clearance workers and the rest offer protection for the mine clearance troops. Thailand insists it has not encroached in any territory."
The Thai army also ratcheted up the rhetoric, saying that it was prepared for a confrontation with Cambodia if the months-long spat on the border escalated.
"The Thai armed forces agreed to maintain troops in the area because that area is claimed by both Thailand and Cambodia," the army said in a statement.
"The armed forces reaffirmed that all three armed forces -- army, navy and air force -- are ready for confrontation in the area and are confident in our potential to defend Thailand's sovereignty," it said.
The Cambodian officials said some 80 Thai troops began to withdraw from the area near the ancient Khmer Preah Vihear temple shortly after commanders from both sides held talks during the morning.
"They withdrew from the area around 10:20am and went back to their headquarters, which is around a kilometre away," Cambodian Brigadier General Yim Pim told AFP by telephone from the area.
"There is no more confrontation now. The situation is eased now, but we still on high alert," he added.
Speaking at an economic forum in Phnom Penh before the reported withdrawal, Cambodian Prime Minister Hun Sen maintained his tough rhetoric.
"I have ordered all military commanders to take responsibility for the area. The area is a life and death battle zone," he added.
"Ants can hurt elephants. They (Thais) should not have done this."
The International Court of Justice ruled back in 1962 that the Preah Vihear temple belongs to Cambodia, but surrounding land remains in dispute.
Tensions between the neighbours first flared in July after the temple was awarded world heritage status by the United Nations cultural body UNESCO.
They escalated into a military confrontation, with to 1,000 Cambodian and Thai troops facing off for six weeks, although both sides in August agreed to reduce troop numbers.
Each country accuses the other of violating its territory.
Hun Sen's comments Tuesday reiterated the ultimatum he made Monday, after negotiations in Phnom Penh between the Cambodian and Thai foreign ministers ended without a breakthrough.
In Bangkok, Thai Prime Minister Somchai Wongsawat called an urgent meeting of the top military brass, and said he was not against withdrawing troops from the disputed area but that the two sides much first agree the details.
"Thailand is not opposed to a withdrawal, where each side moves back to avoid confrontation, but we propose that the detail of any withdrawal should be worked out by a joint committee," he told reporters earlier.
He said the committee would decide the extent of any pullback.
After his trip to Phnom Penh, Thai foreign minister Sompong had appeared bullish, saying he thought should they should wait for Cambodian officials to cool down and insisting the disputed land belonged to Thailand.
"The problem now is not about withdrawing or not withdrawing -- it's our territory. How can they tell us that it is their territory?" he asked.
"As soon as I returned there was a report of a deadline. What can we do? We are in our own homeland, and they want us to evict us from our own home."