The crowd of supporters Friday evening waved Thai flags and chanted for the prime minister to fight back against his critics.
Mr. Thaksin told the crowd that, if, in next month's election, the people do not want him, he will step down.
He says that, after the election he will launch political reform, which should take about one year to complete. He adds that, when that process is finished, he will call fresh elections.
Mr. Thaksin's party organized the rally, after weeks of mass demonstrations calling for him to resign because of allegations of corruption and abuse of office.
The calls intensified after his family sold nearly $2 billion worth of stock in the company he founded without paying any taxes.
The tax-free sale was deemed legal, but angered many Thais.
Nevertheless, the prime minister enjoys considerable support among rural people and the poor.
A hotel worker, Khun Tuki, says Mr. Thaksin should stay on, because he has boosted the Thai economy, and has launched many social programs.
"He's smart. We never had a president like this before," she said. "All the people just talk about it, think it."
Nevertheless, many educated and middle class Thais say the prime minister has used his wealth and three-fourths majority in parliament to undermine independent institutions and muzzle the news media. University professors and students have launched a petition drive to impeach him.
Mr. Thaksin, seeking to defuse the situation, last week dissolved parliament and called elections for April 2.
However, the three main opposition parties are boycotting the vote.
Abhisit Vejjajiva, head of the Democrat Party, told reporters the election will not be fair because the Thaksin government has undermined the democratic system.
"We are protesting a new form of dictatorship and authoritarianism. We do not want to be part of a process that extends this license to corruption and violation of rights," he said.
The opposition wants an appointed government to oversee reforms to the nine-year-old constitution. The opposition is to hold another mass rally Sunday in Bangkok, and says, if the prime minister does not resign by Monday, it will hold more rallies.
The prime minister's supporters say the opposition, in calling for his resignation and refusing to participate in the elections, is acting outside the constitution.
Positions have hardened in recent days leading to fears of violent confrontations and possible military intervention. However, military commanders have pledged to uphold democracy, and urged the demonstrators to remain peaceful.