BANGKOK - THAI Interior Minister Aree Wongsearaya said on Wednesday he would resign next month over a conflict of interest, paving the way for retiring coup leader Sonthi Boonyaratglin to replace him.

General Sonthi, due to retire as the army chief at the end of this month, has not hidden his desire for a ministry but says it is up to Prime Minister Surayud Chulanont to decide.

Gen Sonthi, who ousted elected Prime Minister Thaksin Shinawatra in a bloodless coup last September, shrugged off threats by Mr Thaksin supporters to hold mass protests if he chose to cling on to power by taking a cabinet post.

'While we're determined to strengthen the nation, trying to take the country back to democracy, we should not be distracted by anything,' he told reporters on Wednesday.

General Surayud - who was asked by Gen Sonthi to become the prime minister - has said it was possible Gen Sonthi will be in the cabinet after his retirement this month.

Defence Minister Boonrawd Somtas said this week he was ready to step down for Gen Sonthi to succeed him and concurrently hold the post of deputy prime minister in charge of national security if Gen Sonthi wanted him to.

But The Nation newspaper quoted an unnamed Government House source on Wednesday as saying Gen Sonthi was likely to double as deputy prime minister and interior minister if Mr Aree quit.

Mr Aree, one of the three cabinet ministers found by the anti-graft agency to hold more than five per cent of shares in private companies - above the limit set for ministers, had refused to quit - unlike two colleagues in the same position.

But on Wednesday, a tearful Mr Aree decided to throw the towel after the anti-corruption agency found that one of the firms in which he owned shares had business deals with his ministry. -- REUTERS