A Thai court dropped charges of insurrection yesterday against the main leaders of a protest movement bidding to topple the government, two days after the worst street unrest in Bangkok for 16 years.

The decision by the Appeals Court opens the way for them to surrender -- as they have promised to do - but offers no long-term solution to the political turmoil hobbling the country.

It followed Tuesday's clashes between police and protesters, which left two people dead and hundreds injured, and left negotiations between the two sides in tatters with protest leaders vowing revenge.

“Seven leaders will surrender, but we will meet this afternoon to set the time and after that we will bail ourselves out to continue our fight." Suriyasai Katasila, one the wanted leaders, told AFP.

Thousands of anti-govemment protesters on Tuesday marched to parliament to try to stop Prime Minister Somchai Wongsawat delivering a policy address. Police moved in and the violence left 478 injured and two dead.

A court had issued arrest warrants for nine key leaders of the People's Alliance for Democracy

(PAD) on August 27 - a day after they stormed Government House -- and police had detained two of

The courts on Thursday threw out the arrest warrants on three serious charges including treason, and granted bail of 100,000 baht (2,900 dollars) and freed the two detained PAD leaders, Chamlong Srimuang and Chaiwat Sinsuwong.

The Appeals Court decided that although die protest leaders committed illegal acts, "it is unreasonable to issue an arrest warrant on insurrection charges, thus the court revokes insurrection charges forallninesuspects."

Two less serious charges of illegal assembly and inciting unrest remain.

Somchai, meanwhile, announced that the government would investigate Tuesday's violence, when police fired tear gas on the protesters trying to besiege parliament, and some retaliated with gunfire.

"The committee will investigate who is right and who is wrong, where the problem occurred and who resorted to violence first so that the public will be accurately informed," he told reporters after a cabinet meeting.

He said he hoped it would prove the government had no role in the

unrest

"The government does not intend to harm anybody," he added.

Political analyst Thitinan Pongsudhirak said the court ruling strengthened the hand of the protesters, who launched their campaign in May claiming the ruling party was too close to ousted pre-mierThaksin Shinawatra.

"If they're on bail they can keep doing the act and still be under the law. It's a big game for them because now people cannot accuse them of being above the law," Thitinan said.

In a potent symbol of the scale of the crisis, Somchai's cabinet met in an airport terminal converted for their use while the PAD protesters occupy their offices.

The PAD claims the current government is running the nation on behalf of Thaksin — Somchai is his brother-in-law -- and objects to its plans to amend the constitution, brought in following the September 2006 coup that toppled Thaksin.

Somchai's People Power Party in December won the first elections since the 2006 coup, but has been beset by protests and court decisions against it, one of which removed his predecessor Samak Sundaravej from office last month.