Though the size of the demonstrations has declined, protesters have managed to shut down some government offices, forcing Prime Minister Yingluck Shinawatra to shift her workplace and snarl Bangkok's traffic.
"We're prepared to use the emergency decree... Everyone involved including the police, the military and the government is considering this option very seriously but has not yet come to an agreement," National Security Council chief Paradorn Pattantabutr told Reuters after a meeting with Yingluck.
"The protesters have said they will close various government offices. So far their closures have been symbolic, they go to government offices and then they leave. But if their tactics change and they close banks or government offices permanently then the chance for unrest increases and we will have to invoke this law," he said.
The emergency decree gives security agencies broad powers to impose curfews, detain suspects without charge, censor media, ban political gatherings of more than five people and declare parts of the country off limits.
One man was killed and dozens of people were wounded, some seriously, when grenades were thrown at anti-government protesters in the city centre on Friday and Sunday.
"I think these attacks have been designed to provoke an army reaction," said Paul Chambers, director of research at the Institute of South East Asian Affairs in Chiang Mai, predicting a measured increase in the violence.
That in turn could prompt the Election Commission to refuse to oversee the Feb. 2 election called by Yingluck and which the main opposition has said it will boycott, he said.
The protests, led by 64-year-old anti-government firebrand Suthep Thaugsuban, were triggered by Yingluck's moves last year to grant amnesty to her brother, the self-exiled former premier Thaksin Shinawatra.
Protesters accuse the billionaire businessman Thaksin of rampant graft and want to remove the influence of family, promising ill-defined political reforms.
The violence is the latest episode in an eight-year conflict that pits Bangkok's middle class and royalist establishment against poorer, mainly rural supporters of Thaksin and his sister.
The government has mostly avoided direct confrontation with protesters while the army, which has staged or attempted 18 coups in 81 years of on-off democracy, has stayed neutral.
The violence is the worst since 2010 when Suthep, at the time a deputy prime minister, sent in troops to end mass protests by pro-Thaksin supporters.
Suthep faces murder charges related to his role in the 2010 military crackdown when more than 90 people were killed, and for insurrection in leading the latest protests.
Yingluck faces legal challenges with the country's anti-corruption agency saying last week it would start investigating her role in loss-making government rice purchase scheme.
The scheme has won her party huge support in the rural north and northeast of the country. But there are signs of growing discontent among farmers who say they have not been paid for their rice and are threatening to block major roads.
Chambers said the rise in violence could suck the police into the fray.
"(That would provide) Suthep with an excuse to accuse Yingluck of repressing the demonstrators, the army may suggest that the Yingluck government step aside or judicial cases against Yingluck's government may be expedited to push (her party) Puea Thai from power," he said.