Thai premier Abhisit Vejjajiva, who has faced pressure from the powerful "Yellow Shirts" at home for his handling of the issue, said the "army and foreign ministries from both countries are working to normalise the situation".

In a sign that the situation remained strained after heavy fighting around the 11th-century Preah Vihear temple, he added that incident "shows that we never fail to protect our sovereignty" on his weekly television address.

A Cambodian military commander stationed at Preah Vihear said the situation was "tense".

"Both sides are still on alert," he said, adding that the Thai and Cambodian armies had held a meeting Sunday and were working together to try to improve the situation.

The neighbours traded heavy weapons fire in an area around the Hindu temple, which is claimed by both countries, on Friday and each said the other had used mortars, rockets and artillery.

Observers say the border issue is being used to stoke nationalist sentiment at home in both Thailand and Cambodia.

Cambodia has said two of its soldiers and one civilian were killed in Friday's fighting, while Thailand said a villager on its side of the border also died.

A Thai soldier was killed in a brief resumption of hostilities on Saturday morning.

The media in both countries have suggested the toll could be much higher, however, with Thai newspapers suggesting 64 Cambodian soldiers were killed. Across the border, it was reported that at least 30 Thai troops had died.

Villages were evacuated on both sides of the frontier when the fighting erupted.

Around 8,000 people fled their homes on the Thai side alone, according to Somsak Suwansujarit, the governor of border province Sri Sa Ket, who said people had started to return to their houses on Sunday.

"The situation is improving," he added.

Both sides have blamed the other for sparking the worst violence in more than two years.