Thailand's prime minister is defending the army's deadly action against protesters, saying officers have "a right to defend" themselves against "armed terrorists."

Prime Minister Abhisit Vejjajiva said during a national televised broadcast Saturday that he is not prepared to compromise the government's course of action.

"I insist that what we are doing is necessary," he said. "The government must move forward. We cannot retreat because we are doing things that will benefit the entire country."

Abhisit made the comments as protesters and government troops clashed for the third straight day in downtown Bangkok Saturday, turning the capital city into a war zone.

Explosions and gunfire rang out as protesters fired a steady stream of rudimentary missiles at troops and soldiers fired live ammunition into the crowd.

The bodies of three protesters were dragged out from the sidewalks near the city's Victory Monument traffic circle. The army says it is not shooting to kill but protesters told an Associated Press photographer army snipers had shot all three in the head.

Red Shirt resolve

At least 22 people have been killed and more than 170 wounded in the fighting, which has raged through Bangkok's most upscale shopping districts since Thursday, when the government moved in to seal off the three square kilometres occupied by the Red Shirts protesters.

The army has declared the area occupied by Red Shirt protesters a free fire zone, marked by burning vehicles and barricades and patrolled by snipers from both sides.

The army set up barricades and barbed wire to contain the protesters, who have occupied the area for more than two months, shutting down shops, hotels and other businesses in an attempt to force the Thai prime minister's resignation.

Freelance journalist Dean Adams told CTV News Channel that he visited the protesters' camp Saturday and estimated that nearly 3,000 "die hard" Red Shirts remain behind their barricades.

"Among them are still some women and children," Adams said. "In the meantime there are bombs going off and sniper fire and people being killed … just outside and on the perimeters of this camp."

Smoke from dozens of fires can be seen rising from the area controlled by the Red Shirts, while in the square at the centre of their camp protest leaders give rousing speeches night and day, Adams said.

"There's a real resolve on the part of the Red Shirts, the protesters. Some of them are real die-hards: some of them I've spoken to say, ‘We will stay here and die here if we have to.'"

Fighting spread to several streets leading to the encampment Saturday and the army has exchanged fire with protesters in several clashes.

"It's just extremely dangerous with snipers, army snipers firing from buildings. There are reports of men in black, snipers from the Red Shirts camp who are taking people down," Adams said. "It's really hairy, it's just really, really dangerous right now."

"Soldiers are not hesitating at this point to return fire … it's really tit for tat right now."

Soldiers set up ‘live firing zone'

Troops have used tear gas, rubber bullets and live rounds on demonstrators after they set fire to tires and a police bus on Friday. The government has accused them of using guns, grenades and firebombs.

Soldiers have strung razor wire across roads and posted signs in Thai and English saying "Live Firing Zone" and "Restricted Area. No Entry."

"The soldiers at this point … have clearly been given the mandate to escalate the confrontations," Adams said.

Abhisit said the government will not retreat but press forward with plans to halt the increasingly violent protests.

"(The protesters) have held the people of Bangkok hostage," he said. "Officers on duty have a right to defend themselves."

The latest violence erupted Thursday after the Red Shirts' military strategist -- a former army general -- was shot in the head and critically wounded, apparently by a sharpshooter, as he spoke to foreign journalists.

Nelson Rand, a Canadian journalist was also shot. He's now recovering in hospital.

His parents say they have heard from him and he's doing well.

"He said, ‘I love you Mom, I love you Dad and I'll be alright," Barbara Rand told CTV News.

Civil war threat

Adams said that earlier in the week it appeared that talks to end the protesters' occupation of the city's commercial centre were making progress, but the Red Shirts added several new demands and "negotiations completely fell apart," he said.

He said the situation appears to be approaching a peak. "They're certainly getting close to some sort of a climax. It's a very scary situation."

Protest leader, Jatuporn Prompan, said the country is close to a civil war.

"We have to fight on," he said. The leaders shouldn't even think about retreat when our brothers are ready to fight on."

The Red Shirts, mostly rural poor, began camping in the capital March 12 to try to force out Abhisit. They claim his coalition government came to power through manipulation of the courts and the backing of the powerful military, and want him to call new elections.

The Red Shirts resent the army after their favoured premier, Thaksin Shinawatra, was removed from office in a 2006 coup. Two more pro-Thaksin governments were formed afterwards but they were disbanded by court rulings before Abhisit became leader of the country.

"The reality is that this conflict also draws heavily on the frustrated political aspirations of a large numbers of rural voters," said Andrew Walker, a political scientist at The Australian National University.

"If election results are going to be overturned, people's political aspirations and frustrations will find expression in other forms," he said.

A total 46 people have been killed and at least 1,620 wounded in violence since, according to government figures.

The Canadian government is warning its citizens not to travel to Thailand unless it is for essential business. The U.S. government has issued a travel advisory warning all citizens to "defer travel to Bangkok," according to U.S. embassy spokeswoman Cynthia Brown.