Thailand revoked the emergency decree it imposed a week ago as it tries to end months of protests against the prime minister and the monarchy.
“It appears that the serious situation that led to the state of emergency declaration has subsided and ended. The circumstances can now be controlled by state officers,” a statement published in the official Royal Gazette said.
The latest government move comes a day after protesters marched to Government House in Bangkok and gave Mr Prayuth a three-day deadline to step down or face more demonstrations.
The prime minister has refused to resign. In an televised address on Wednesday he said discussions should be held in parliament.
“I will make the first move to de-escalate this situation,” said Mr Prayuth as he announced he was ready to lift the decree.
“I ask the protesters to reciprocate with sincerity, to turn down the volume on hateful and divisive talk.”
An extraordinary parliamentary sitting has now been announced for Monday.
The decree was announced last week as Thai authorities citied the proximity of protesters to Queen Suthida’s convoy. Later, authorities arrested dozens of activists, including key protest leaders.
They also ordered investigations into a number of news outlets, suspended the online platforms of Voice TV, a local broadcaster, over its coverage of the protests and ordered internet providers to block Telegram, a private messaging app that protesters have used to organise rallies.
But the escalating crackdown failed to stem the protests. Activists ignored the protest ban and have rallied in the tens of thousands in the days since, demanding the release of those in prison.
At a large demonstration in Bangkok last Friday, police used major force for the first time in this renewed wave of protest, deploying water cannons and tear gas to break up the rallies.
Protesters have responded by employing fresh tactics, including flash mobs and calls for everyone to be a leader to avoid arrest.
Thailand’s student-led democracy movement began in July, they been calling for the resignation of Prime Minister Prayuth Chan-ocha. The former army chief had seized power in a 2014 coup before he was appointed as premier after controversial elections last year.
The protests have widened in recent months to also call for curbs on the king’s powers.
Demonstrators also demand the constitution be rewritten; that the authorities stop harassing critics and royal reform are particularly sensitive in where criticism of the monarchy is punishable by long prison sentences.