Thai security forces surrounded a hotel on Friday where leaders of the "Red Shirt" protest movement were holed up, but failed to make any arrests after the suspects fled, officials said.
Television footage showed one of the protest leaders climbing down a rope to escape from the SC Park Hotel as Red Shirt demonstrators massed outside.
Special forces surrounded the building, where "terrorists" and leaders of the red-clad protest movement were hiding, Deputy Prime Minister Suthep Thaugsuban announced in a nationally televised address.
One Red Shirt leader, Arisman Pongruangrong, was seen descending a rope to leave the hotel in Bangkok's northern outskirts and the movement said all its leaders had managed to escape.
A government spokesman admitted that the operation was "unsuccessful."
Arisman, who led the protesters' storming of parliament earlier this month, told supporters by megaphone he had escaped an assassination attempt.
"He wanted to kill me. The policeman tried to kill me," Arisman told the assembled Red Shirts amid chaotic scenes outside the hotel.
The authorities, meanwhile, urged thousands of protesters massed in the commercial district to leave the area, warning that they were ready to take "decisive measures" following the worst civil violence in almost two decades.
"Innocent people should leave the protests because the authorities have to take decisive measures against terrorists," Suthep said.
Red Shirts later gathered outside the hotel, scuffling with riot police who were guarding the building.
"If today is the end, we're ready," Reds leader Nattawut Saikuar said from the rally stage in the commercial hub, urging protesters to go to the hotel.
The hotel is believed to be owned by fugitive former premier Thaksin Shinawatra, political icon of the red-clad protest movement that has been rallying for more than a month in Bangkok to demand immediate elections.
Arrest warrants have also been issued for leaders of the Red Shirt protesters, some of whom stormed parliament earlier this month.
The Reds charge that the government is illegitimate because it came to power in 2008 after a court ousted Thaksin's allies from power.
Prime Minister Abhisit Vejjajiva has blamed "terrorists" for inciting last weekend's violent street clashes, which left at least 23 people dead and more than 800 wounded.
Saturday's clashes erupted as the army tried unsuccessfully to clear an area in Bangkok's old city, sparking street battles involving soldiers, red-clad protesters and unidentified gunmen described as "terrorists" by the government.
The Reds have challenged the government's assertion that there were M16 and AK47 assault rifles among the protesters.
The army has said live shots were fired only in the air or by troops providing cover for soldiers who were themselves under fire.
The authorities have said they will not try to put down peaceful rallies but have urged the Reds to leave the commercial district, where they have disrupted traffic and caused major shopping centres to close.
Leaders of the red-clad movement have said there is no point in further talks, demanding immediate elections.
Negotiations last month between the two sides ended in stalemate after the Reds rejected the government's offer to hold polls at the end of the year.
The government, which imposed a state of emergency in Bangkok and surrounding areas a week ago, has accused Thaksin of stoking the unrest.
Eighteen civilians, including a Japanese cameraman, and five soldiers were killed in the clashes, with more than 800 injured, according to the Erawan emergency centre.