Updated 5.30pm

A Thai princess will run for prime minister in March elections, in an unprecedented entry by a royal into frontline politics which pits her against the chief of the ruling junta, throwing into disarray his bid to stay in power.

Princess Ubolratana, 67, the older sister of Thai King Maha Vajiralongkorn, was announced as a candidate for the Thai Raksa Chart party steered by the divisive Shinawatra political clan.

The Thai monarchy, a revered institution shielded from criticism by a tough defamation law, has traditionally been seen as above the political fray, although royals have intervened in moments of political crisis.

Thailand's King Maha Vajiralongkorn late Friday said the move to make his sister Princess Ubolratana prime minister if they triumphed in upcoming elections was "inappropriate and unconstitutional".

"To bring a senior royal family member into the political system is against royal traditions and the nation's culture... it is inappropriate," an unexpected statement in the Royal Gazette said.

Ubolratana's nomination has electrified the buildup to a March 24 election which had seemed poised to return the junta and its proxies to power in some form.

It dramatically redraws the kingdom’s political landscape by giving a royal sheen to Thaksin Shinawatra's political machine, which has won every election since 2001.

Her support also potentially builds a bridge between Thaksin's "Red" shirted supporters and the "Yellow" shirts - who are arch royalists. Deadly violence and disruption linked to the two groups has defined Thailand's turbulent last decade.

"The board agrees that the name of Princess Ubolratana, an educated and skilled person, is the most suitable choice," Thai Raksa Chart party leader Preechapol Pongpanich told reporters.

The party falls under the tutelage of Thaksin, a billionaire self-exiled former premier, who stands at the heart of Thailand's bitter political schism - loathed by the army and Bangkok elite, yet adored by the rural poor.

The announcement thrusts him back to the centre stage of Thailand's political drama just as it appeared the military were set to succeed in sidelining him.

He was toppled in a 2006 coup, and his sister Yingluck was booted from power in a 2014 military takeover and forced into exile to avoid a jail term.

The princess' move deals a heavy blow to the political aspirations of Prayut Chan-O-Cha, the junta head, who has spent nearly five years trying to recast the political system to limit the power of elected governments and prepare his own return as a civilian leader.

In a day of high political drama, Prayut declared his candidacy for premier, running for the Phalang Pracharat army party, moments after the princess's announcement.

"I want to reassure that I do not intend to hang on to power. It is not easy for me to make my decision... it is a crucial moment for the country."

Bridging the divide?

The military under Prayut has cast itself as the protector of the monarchy.

But Ubolratana's shock entrance into politics, aligned with the junta's nemesis - the Shinawatra family - undercuts those claims.

Ubolratana, a colourful, public-facing royal in contrast to her more restrained brother King Maha Vajiralongkorn, relinquished her royal titles after marrying the American Peter Jensen in 1972.

But the couple divorced and she moved back to Thailand where she is still considered part of the royal family.

Thailand has not had a royal as premier since becoming a constitutional monarchy in 1932.

It was not immediately clear if Ubolratana would be covered by the kingdom's widely interpreted royal defamation law - which carries up to 15 years in jail per charge - or how that could impact debate and criticism in the run up to elections.

"It is unprecedented if she becomes prime minister," said Puangthong Pawakapan, professor of political science at Chulalongkorn University.

"Can people treat her like a commoner? Who would dare criticise a royal prime minister?"

Known to the public for lead roles in Thai films, onstage singing performances, a vibrant fashion sense and a sizeable Instagram following, Ubolratana is the first-born child of the late King Bhumibol Adulyadej.

She was seen at the 2018 World Cup in Russia smiling with Thaksin and Yingluck and has over the junta years given a number of coded nods on social media in favour of the Shinawatras.

Since ascending the throne in 2016, King Maha Vajiralongkorn has reorganised palace affairs.

The vastly wealthy Crown Property Bureau is now under his personal stewardship, he has appointed several new privy counsellors and established a highly trained personal guard.

Crucially he has appointed a new army chief from a different faction of the military to the ruling junta.

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