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The party is allied to former Prime Minister Thaksin Shinawatra, who was deposed by the military in 2006.

Its opponents had claimed the party was merely a proxy for Mr Thaksin, who was banned from politics for five years.

The PPP won the most seats in December's national polls but several challenges threatened to prevent it from forming a government.

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Sixty five of the 233 seats it won have been investigated by the Election Commission - far more than any other party. Three were disqualified and others ordered to face re-runs.

The Supreme Court had also heard a claim filed by Democrat candidate Chaiwat Sinsuwong, who alleged that the PPP was a proxy for Mr Thaskin's dissolved Thai Rak Thai (TRT) party and should therefore be banned.

Many TRT members went on to form the PPP.

The BBC's Jonathan Head in Bangkok says many in Thailand had started to believe that Mr Thaksin's opponents, who wield huge influence behind the scenes, would use the judiciary to keep his allies from office.

The next big question confronting Thailand as it returns to democratic rule, he says, is when Mr Thaksin will come home and whether he will be allowed to play a political role again.

(BBC)

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