Renegade Thai general who sided with Red Shirts is shot in the head

US and UK embassies closed as state of emergency is declared across country

The centre of Bangkok was on a knife-edge last night as a rogue soldier serving as the military leader of the Red Shirt protesters was shot in the head – allegedly by an army sniper – as gunfire and explosions rocked Thailand's capital. The shooting came after the government warned they would "shoot terrorists".

Major General Khattiya Sawasdiphol, who has been accused of building a paramilitary force among the protesters, was wounded while speaking to a journalist who wrote that he "heard a loud bang not unlike a firecracker". "The general fell to the ground, with his eyes wide open," said Thomas Fuller of The New York Times.

His last words before he was shot were: "The military cannot get in here."

Protesters took the general to hospital screaming his nickname, Seh Daeng, or Commander Red. Last night he was being treated in an intensive care unit. There was no independent confirmation as to who had shot him, or why. At least one person, a 25-year-old man, was killed in clashes between protesters and soldiers that ran into the night. Another seven were injured. The shooting of General Khattiya, who helped to construct the barricades behind which the Red Shirts have taken up position in recent weeks and which have brought parts of the Rajprasong neighbourhood of Bangkok to a standstill, came as automatic gunfire and explosions could be heard in the centre of the city.

The general enjoys a cult following among rank-and-file protesters but is considered a "terrorist" by the army and viewed with suspicion by some of the protest leadership. His shooting is just the latest twist in a long-running dispute between the mostly rural, poor protesters who are seeking to topple the government, and security forces who have sought to quell the turmoil, often using violence. The Red Shirts believe the Prime Minister, Abhisit Vejjajiva, came to power illegitimately through manipulation of the courts and want him to call immediate elections.

The violence came after a deadline set by the security forces for the protesters to leave their camp in a shopping district passed without any move from the Red Shirts. The army, which has moved armoured vehicles into the area, has said it was planning a lock-down in an effort to bring an end to the demonstrations, which have lasted five weeks. Earlier yesterday, troops shut off roads surrounding the protesters, forcing businesses to evacuate their staff. On Thursday afternoon, the mood in the protesters' camp turned from festive to tense. Protest leaders, many of them supporters of the former prime minister Thaksin Shinawatra, called for more demonstrators to join the 20,000 already in the encampment, constructed from tyres and timber soaked in petrol and topped by razor wire.

Fearful of a crackdown by the army, the protesters threatened to leave their compound and surround the infantry barracks where Mr Abhisit has recently been hunkered down. Mr Abhisit, the Eton- and Oxford-educated premier who came to power in 2008, is under pressure to deal with the stand-off that has led to the deaths of 30 people, wiped millions of dollars from Thai shares and damaged the country's image.

The Prime Minister had offered a new election in November as part of a "national reconciliation" proposal. On Wednesday, with the protesters still in place, he cancelled the offer, triggering speculation that the army was planning a crackdown. However, other military sources told the Associated Press they wished to avoid further casualties.

The government extended a state of emergency to 17 provinces in the hope of preventing rural protesters joining the group in the capital. The US State Department announced yesterday that its embassy would close immediately. Later in the day the Foreign Office confirmed that the British consulate in the Thai capital would be closed today.

At the heart of the dispute is the belief by many protesters that Mr Abhisit has no mandate, having been elected premier by the parliament. He came to power amid a constitutional crisis in which two previous prime ministers – both allies of Mr Thaksin – were forced from office. Mr Thaksin, a twice-elected former telecommunications tycoon who took much of his support from Thailand's rural poor, was toppled by a military coup in 2006.

As determined as the Red Shirts are to oust Mr Abhisit and force elections which they believe they would win, large numbers of Thailand's more conservative urban middle class, army officers and business owners are opposed to the protesters and their demands for greater democracy. They are also staunchly opposed to Mr Thaksin, who was convicted of corruption in absentia and lives in exile, mainly in Dubai.

General Khattiya claims to have trained hundreds of former paramilitaries to protect the protesters. "If the state clamps down on us, we have to defend ourselves. We and our Red Shirt brothers may need to resort to weapons," he said in February.

The officer, suspended by the army earlier this year, claims to be close friends with Mr Thaksin, whom he says he met in Dubai two months ago.

How the tension has built

2001 Thaksin Shinawatra's initial election marred by allegations of vote-buying. A plane he is due to board is bombed

May 2006 Thaksin calls election amid rallies against him. Opposition boycotts it

Dec 2006 While Thaksin is at UN meeting, military stages bloodless coup

May 2007 New government outlaws Thaksin's party, Thai Rak Thai

Jan-Aug 2008 Thaksin's new party wins elections. He returns from exile but flees to Britain during corruption trial

Sept-Nov 2008 Demonstrators on both sides descend on Bangkok. Violent clashes escalate until airport is closed and Prime Minister Somchai is forced from office. Abhisit Vejjajiva takes over

Dec 2009 Thaksin supporters rally in Bangkok to demand fresh elections

March 2010 Protesters return to occupy centre of Bangkok, pouring blood under gates at Prime Minister's house

May 2010 Abhisit offers deal for new elections but withdraws it and demands protesters leave camp in city centre