A Thai flag has also been hoisted in a disputed area near the Preah Vihear ruins, where the flying of a Cambodian flag has raised tensions, Prime Minister Abhisit Vejjajiva said on Tuesday.
Mr Abhisit said this information was included in a situation report made by Defence Minister Prawit Wongsuwon.
"We have never said that the Keo Sikha Kiri Svara pagoda should be demolished. We said only that the Cambodian flag flying over the temple should be removed.
"But, meanwhile, we have also flown our flag there," the prime minister said, but did not elaborate.
The Keo Sikha Kiri Svara temple is located in the 4.6 square-kilometre disputed area adjoining the Preah Vihear temple.
The prime minister admitted that Thai and Camboldian military forces were confronting each other along the border.
However, there should be no problems if both sides observe the 2000 memorandum of understanding, and this is the best way of solving the Thai-Cambodian dispute, he said.
Mr Abhisit said Thai and Cambodian authorities have been in contact to ease the tension and prevent possible border infringements by either side.
National army chief Prayuth Chan-ocha also said earlier today that a Thai flag had been raised in the 4.6 square-kilometre disputed area where both countries claim ownership.
"We have done that acting on orders," Gen Prayuth said.
The army chief insisted that the best way to settle the border dispute with Cambodia is by formal talks.
It is most important the problem is resolved by negotiation through the Thai-Cambodian Joint Boundary Commission (JBC), he said.
The Foreign Ministry was trying to arrange a new meeting of the JBC to discuss the matter.
The situation along the border remained normal today, and the 2nd Army was well prepared to ensure peace and order in the border area, he said.
The Cambodians had similar security measures along the border, but that did not mean the two sides were on the verge of clashing with each other, said Gen Prayuth.
“The use of force will be the last means we will turn to.
"It’s now the government’s duty to try to end the problem through talks," he said, reiterating that Thailand had not lost any territorial sovereignty to Cambodia.
Meanwhile, the Criminal Court rejected a lawsuit filed by two members of the People's Alliance for Democracy (PAD) against Prime Minister Abhisit and three other ministers for alleged negligence causing the loss of territorial sovereignty to Cambodia.
The other three named in the suit were Deputy Prime Minister Suthep Thaugsuban, Foreign Minister Kasit Piromya and Defence Minister Prawit.
The lawsuit was filed on Jan 26 by Samdin Lertbutr and Tainae Mungmajon, two of the seven Thais arrested by Cambodian soldiers on Dec 29 for illegal entry.
The two were freed after a nine-month jail sentence was handed down on them by the Phnom Penh Municipal Court, which found them guilty, was suspended on the grounds that they had already served nearly one month in jail.
The Criminal Court rejected the lawsuit, ruling that it had been filed with the wrong court.
It should be filed with the Supreme Court's Criminal Division for Holders of Political Positions under Section 275 of the constitution, the court said.
PAD co-leader Chamlong Srimuang claimed the government has a three-stage plan to disperse the yellow-shirt protest outside Government House.
People's Alliance for Democracy (PAD) co-leader Chamlong Srimuang looks at a sign criticising Prime Minister Abhisit Vejjajiva. The sign reads: PM - Liar - Stupid - Sneaky - Traitorous - Slave to Khmer
Maj Gen Chamlong said the government would send senior police officers to ask the yellow-shirt protesters to unblock roads when there is actually little traffic.
The police had changed the settings so traffic lights stayed on red longer, causing people to be frustrated and blame the rally, he said.
The government would then send undercover agents into the rally to stir up confusion and conflict among the yellow-shirt group.
The final stage would be the deployment of more police and a crackdown on the protesters, he said.
"The government's attempt will fail because the PAD will not move anywhere unless the government accedes to our three demands," Maj Gen Chamlong said.
He said the government should concentrate on the Thai-Cambodian problem instead of focusing on the yellow-shirt protesters.
"As a professional demonstrator, I can affirm that our rally will not end. If our rally is dispersed today, we can start it again tomorrow.
"If the government refuses to protect our country we won't end our rally," he added.
The yellow-shirt key member said he had lost count of the number of lies Prime Minister Abhisit had made about Thai-Cambodian border issues.
The government had begun to take action only when the PAD revealed the information about the Cambodian flag being hoisted near Preah Vihear temple, he said.
He said the government should not give in too much in its dealings with Cambodia.
The PAD started its peaceful protest outside Government House last Tuesday, pressing the government to withdraw from the Unesco World Heritage Committee, scrap the memorandum of understanding on the Thai-Cambodian border signed in 2000, and expel Cambodian people from disputed border areas.