Cambodia says Thailand's fugitive former prime minister Thaksin Shinawatra has resigned as Cambodia's economic advisor, clearing the way for an easing of strained relations between the two countries.

Phnom Penh said Monday Thaksin stepped down at his own request because of difficulties in fulfilling his duties.  

The former Thai leader, who now lives abroad, was ousted in a 2006 coup and was sentenced in absentia to two years in prison.  Thailand accuses Thaksin of organizing and funding anti-government "Red Shirt" protesters.

Thai government officials indicated Monday that both countries could reinstate their ambassadors in light of Thaksin's resignation.

The diplomatic row started in November when Cambodia appointed Thaksin as an economic advisor.  Thailand accused Cambodia of intervening in Thai politics, and both countries recalled their ambassadors.    

Relations between Cambodia and Thailand also are troubled by a festering territorial dispute.

Other Southeast Asian countries are discussing a Cambodian request that the Association of South East Asian Nations mediate the dispute over land around an ancient Hindu temple, Preah Vihear.  

The International Court of Justice ruled in 1962 that the Preah Vihear temple lies on Cambodia territory.  But both sides lay claim to a 4.6-kilometer stretch of land that controls access to the site.

Each side has thousands of troops positioned along the border, where skirmishes since 2008 have left at least eight soldiers dead.

Some information for this report was provided by AP, AFP and Reuters.