The Constitution Court ruled by a 6-3 vote that the February 2 snap election was unlawful because it was not completed in one day.
The court reasoned that the election violated Article 108 (2) of the Constitution because no candidates stood in 28 constituencies in eight southern provinces, and thus making it impossible to hold the election on the same day nationwide.
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The article requires that a general election must be held on the same day throughout the country.
The court ordered the Election Commission to consult with the government on the new election date.
The opposition Democrat Party had boycotted the polls and its supporters who have for the last four months taken over several government buildings had blocked polling stations to bar people from casting vote in Bangkok and the south.
They had also disrupted registration of candidates which led to no candidates contesting in many places.
The polls, called by Prime Minister Shinawatra in an attempt to ease opposition led political crisis, have not yet been completed because of disruption by demonstrators.
The ruling Pheu Thai Party ran effectively unchallenged for the other seats amid opposition boycott.
The judges heard evidence from Ombudsman Pornphet Wichitcholchai, caretaker Deputy Prime Minister Pongthep Thepkanchana, who testified on Prime Minister Yingluck's behalf, and Election Commission chairman Supachai Somcharoen.
Thailand has been in a political crisis since mass rallies began in November. The protesters are demanding an unelected People's Council to replace the Yingluck regime.
The protesters accuse Yingluck of acting as a proxy for her fugitive brother, former premier Thaksin Shinawatra, who was ousted in a coup in 2006. He lives in self-exile in Dubai to escape a jail term on a corruption conviction.