As the anti-government protesters claimed a symbolic victory, Yingluck sought to use the king's birthday to launch a fresh effort to resolve the crisis, asking protesters to join a forum for political reform.
Hundreds of protesters poured into the lawns of the premier's office after police removed barricades, saying they would no longer use force against activists.
The mood in the capital Bangkok was considerably calmer after the surprise move ahead of revered King Bhumibol Adulyadej's 86th birthday on Thursday.
However, protest leader Suthep Thaugsuban said the fight to unseat the government was not over. "This is a victory but it's not a decisive victory," he said.
More From This Section
"It's a partial victory but it's not final because the Thaksin regime is still in place. You cannot go back home yet...We must continue fighting."
The protesters accuse Yingluck of being a proxy for her elder brother, former premier Thaksin Shinawatra, who was ousted in 2006 by the military and is in self-exile.
Yingluck invited protesters, academics and businessmen to join a forum to bring about political reform. In a brief televised address, she said talks were needed between different sections of society to find a long-term solution.
"Although the current political situation has not completely returned to normal there has been substantial progress. The government has asked both the army and police to carry out their duty with leniency and refrain from confrontation and violence that would cause casualties among the public," she said.