A policeman looks at the bullet-riddled window of the car in which Sondhi Limthongkul, one of the founders of the People's Alliance for Democracy (PAD), was traveling in, in Bangkok early on Friday. (Inset) Sondhi lies injured in a hospital. [Agencies]

The assassination attempt came hours before the government extended a state of emergency in the capital at a cabinet meeting to discuss the past week's political violence. It also agreed to increase government borrowing to support the beleaguered economy.

"He is safe now and able to talk," said Dr Chaiwan Chareonchoktawee, director of Vajira hospital, after Sondhi had an operation to remove bullet fragments and bits of skull bone.

Other leaders of Sondhi's People's Alliance for Democracy (PAD), told their supporters to remain calm.

Bangkok Metropolitan Police Commissioner Vorapong Chiewpreecha told television that 84 spent cartridges were found at the scene of the assassination attempt.

"We also found an M-79 grenade that was fired but missed Mr Sondhi's vehicle. It hit a passing public bus but did not go off," he said.

Sondhi's driver was seriously wounded and his bodyguard suffered minor injuries.

Sondhi's yellow-shirted PAD is a motley collection of royalists, academics, ex-military people and Bangkok's middle classes united in their loathing of former Prime Minister Thaksin Shinawatra, who was deposed in a 2006 military coup and lives in self-imposed exile.

Thaksin's red-shirted supporters invaded and caused the cancelation of a summit of Asian leaders in Thailand last weekend and then staged protests in Bangkok in which two people were killed before being ended on Tuesday.

PAD leaders denounced the failure of the security services to prevent the attack on Sondhi, especially as security was supposed to be tight under the emergency, and called for the national police chief to be sacked.

But they told their members to be calm and did not call for action, other than the continuation of a series of local rallies, the next to be held on the tourist island of Phuket on Saturday.

"We're not pointing the finger at anybody as the mastermind of this operation. We will wait for the government to find out," Suriyasai Katasila told a news conference broadcast live on PAD's radio station.

Earlier, another PAD leader, Pipop Thongchai, had blamed "Thaksin's lieutenants who could not accept defeat after their setbacks" over the past week, when troops forced them to end a siege of Government House.