Anti-government demonstrators seeking to oust Thaksin's sister, Prime Minister Yingluck Shinawatra, occupied parts of several major streets and overpasses in Bangkok this week, blocking them off with walls of sandbags, tires and steel barricades.
The protests, which are also aimed at derailing Feb. 2 elections that Yingluck called in a bid to defuse the crisis, have been peaceful, and most of the city away from the protest sites has been largely unaffected, though many countries have warned visiting nationals to exercise caution.
But assaults have been reported nightly, including shooting attacks at protest venues and small explosives hurled at the homes of top protest supporters. It is unclear who is behind them.
Yingluck urged the police to quickly make arrests in the attack, saying she opposed any use of force and was concerned the situation in the capital was becoming more chaotic.
Prolonged violence, even on a small scale, increases the risk of a military coup, which would benefit the protest movement. Thailand's army has staged about a dozen successful coups since the end of absolute monarchy in 1932. Since the latest wave of protests started in November, at least eight people have been killed and more than 480 have been injured.
Suthep, speaking Friday at one of the protest sites, accused the government of being behind the grenade attack.
"Let me tell you, brothers and sisters: There's no need to suspect anyone else. It is solely the government that is doing this," he said. "No one else would do this. They thought it up, they planned it, and they acted on it."
The government has generally gone out of its way to avoid violent clashes with the demonstrators. The authorities temporarily ceded the premises of the city police and other offices to the aggressive crowds, though on other occasions police used tear gas and rubber bullets to keep them at bay.
Police said the grenade Friday was hurled from the direction of one of several nearby abandoned buildings.
Witnesses said panicked people began running away after the blast, while some helped carry victims with blood dripping from their arms and legs. A damaged pickup truck sat idle, its front tires flat and gasoline from a ruptured tank spilling across the road near splotches of blood.
The buildings were quickly searched by protesters armed with wooden sticks. Soldiers and a police explosive ordnance disposal team combed the area, finding five walkie-talkies, several knives, rifle parts and a pair of flashlights.
The violence comes as pressure mounts against Yingluck to resign. She is facing new legal troubles after the National Anti-Corruption Commission announced late Thursday that it had found grounds to investigate allegations that she was criminally negligent in her handling of what the government had described as a deal to export surplus rice to China. The commission has already determined that there are grounds to press charges against Yingluck's former commerce minister and more than a dozen other officials.
If found guilty, Yingluck would be forced out of office.
Yingluck's supporters fear the move is part of a legal push by opponents to oust her. After her brother Thaksin was toppled in 2006, court rulings forced two other pro-Thaksin heads of government from power.