The Thai army has designated an area of Bangkok as a "live firing zone" in a warning to protesters on a third day of violence that has killed at least 16.
"No entry" signs have been put up near a barricaded camp where the protesters, who want the prime minister to resign, have been based since March.
Some 150 people have been injured since the violence broke out, and three more deaths were reported on Saturday.
Authorities have ruled out negotiations with the red-shirt protesters.
Despite claims by the Thai government that the situation is under control and its soldiers have only fired in self-defence, army snipers have been accused of targeting protesters, and footage from Bangkok on Saturday showed red-shirts dragging gunshot-victims to safety.
Explosions and sporadic gunfire can be heard around the protest site, where barricades of tyres are still burning.
The violence escalated on Thursday after a renegade general who supports the protests was shot in the head by an unknown gunman.
Gen Khattiya Sawasdipol, better known as Seh Daeng (Commander Red), is in a critical condition and doctors believe he is unlikely to survive.
Embassy advice
Correspondents say the live firing area, more than 1 kilometre north of the camp, is an area the army has been trying to secure for several hours, and has been designated by the government to prevent reinforcements entering the camp and getting behind military roadblocks.
Around a third of the city is now under emergency rule, but while there are pockets of fighting, life beyond the barricades seems to be going on as normal, correspondents say.
Inside the camp, red-shirt leader Kwanchai Praipana said stocks were running low because of the blockade, but added that they would last "for days".
"We'll keep on fighting until the government takes responsibility," he said.
Tori Anderson, who lives close to the camp, said the gunfire and explosions overnight had made it a sleepless night for many of the city's residents.
"I have lived in Pakistan and Afghanistan but I feel more worried right now," she told the BBC. "The atmosphere is really tense because there is such a build up of soldiers and weapons."
The US embassy has stepped up its travel warnings, advising its citizens to stay away from Bangkok, and is offering to evacuate family members of diplomatic staff.
The US has encouraged the two sides "to find a way to work peacefully through these differences", while UN Secretary General Ban Ki-moon has also urged restraint.
Journalists shot
On Friday, troops fired live rounds, tear gas and rubber bullets in clashes with the protesters, who threw petrol bombs and stones at the soldiers.
One Canadian and one Thai journalist were shot. A government spokesman said troops had come under attack and "had no choice but to respond", adding that they were authorised to use live rounds in self-defence, for warning shots or against armed protesters.
The military said some protesters had fired guns and threw grenades.
The protesters, who have adopted the colour red, have reinforced the barricades around their camp made of bamboo stakes, tyres and sandbags.
Many of the protesters support former Prime Minister Thaksin Shinawatra, who was ousted in a 2006 coup.
They want Prime Minister Abhisit Vejjajiva to dissolve parliament and call fresh elections.
He had offered polls in November - but the two sides failed to agree a deal because of divisions over who should be held accountable for a deadly crackdown on protests last month.
Mr Thaksin has called on the government to withdraw troops and restart negotiations.
Thailand's worst political unrest in nearly two decades has now left at least 42 people dead and more than 1,400 wounded.
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