* Government says avoiding confrontation
* Protesters mingle with police at flashpoints
* Army says staying out of political issue
Thailand's government ordered police on Tuesday to stop confronting protesters demanding the resignation of the prime minister, raising hopes that days of political violence may end, but the leader of the campaign said the fight would go on.
The protesters who oppose Prime Minister Yingluck Shinawatra have been besieging various government buildings in the capital, including Government House, the complex that houses her offices.
After days of firing teargas canisters and rubber bullets to hold them off, police handed out roses to flag-waving protesters after the barricades were brought down. The protesters mingled with police, shouted slogans and left peacefully.
"We don't want anyone to go inside and ruin government buildings," said Brenda Nong, 51, a protester from Bangkok. "We're good people. We're here for democracy."
The developments raised hopes that the latest eruption of conflict between the Bangkok-based establishment and forces loyal to Yingluck and her brother, former premier Thaksin Shinawatra, may be over.
Five people have been killed in clashes since the weekend and scores hurt. A heavy-handed government crackdown would have raised questions about the government's survival and the possibility of the military stepping in to restore order.
Protest leader Suthep Thaugsuban however said the campaign against what he called the "Thaksin regime" would continue.
Thursday is the birthday of much revered King Bhumibol Adulyadej, and the protesters are highly unlikely to continue their campaign on what is traditionally a day of prayer and celebration.
The government said it wanted to avoid more violence and ease the tension for the king's birthday.
"The government is still doing its job. This morning we had a cabinet meeting as usual," Deputy Prime Minister Pongthep Thepkanchana told Reuters.
"We haven't given up, but today the police have backed off because we see the protesters just want to seize these places as a symbolic action, so we want to compromise."
He said Yingluck wanted to open talks with the protesters, academics and others to try to find a solution. She has refused to resign.
The demonstrators, who still occupy the Finance Ministry and a state administrative centre, celebrated what they called a partial victory even though the government they hate remains in place.
"Today we won a partial victory but we will fight on until the Thaksin regime has been driven out," Suthep told his supporters.
ARMY KEEPING DISTANCE
Suthep had vilified the police in a speech on Monday and said the protesters would capture their city headquarters. On Tuesday, city police chief Kamronvit Thoopkrachang said his men would not resist the protesters.
Kamronvit is close to Thaksin, himself a former policeman and then a telecommunications tycoon, who became Thailand's most popular politician with policies to help the urban and rural poor.
Suthep is a former deputy prime minister of a government bitterly opposed to Thaksin that ordered the military to put down pro-Thaksin protests in 2010. About 90 people were killed.
Yingluck's government came to power with a landslide election victory in 2011.
Thaksin was ousted by the military in a 2006 coup but army chief Prayuth Chan-ocha told reporters on Tuesday the army was not getting involved this time: "This is a political problem that needs to be solved by political means. However, we are monitoring from a distance."
Thai consumer confidence has been hurt by the protests, falling in November to its lowest level since February 2012. . That, plus cancellations by tourists, could add to the problems of an economy struggling with the weakness of global export markets.
Thai financial markets have fallen sharply since the protests began more than a month ago in opposition to a government amnesty bill that would have cleared Thaksin of a graft conviction and allowed him back from self-imposed exile.
However, the baht currency was steadier on Tuesday at around 32.20 to the dollar, while the stock market rallied 0.6 percent.
Thaksin's opponents hold considerable power and influence, among them wealthy conservatives, top generals, bureaucrats, royalists and many members of the urban middle class.
Many of them see Thaksin as a corrupt, crony capitalist who manipulates the masses with populist handouts and is a threat to the monarchy, which he denies.
He is adored by the poor who would be outraged to see Yingluck's government removed. Yingluck said on Monday she was willing to explore every possibility for a peaceful solution. Her party would probably win any new election.
Suthep, 64, who resigned as a Democrat lawmaker to lead the protests, wants a vaguely defined "people's council" to replace the government. Yingluck said that was unconstitutional.