Up to eight suspected rebels wearing government-style caps and carrying apparent official documents opened fire with machine guns on the tea shop in Raman district of Yala province this morning.
"They were dressed like security officials and carried official documents pretending that they were there to gather information," Major Prathuang Suwanchatri of Raman police said.
"All three victims were former village headman or deputy headmen who had cooperated with authorities in the past," he said, adding another person was injured in the shooting.
Rounds of peace talks in Malaysia between Thai authorities and some rebel groups, including the Barisan Revolusi Nasional, had raised tentative hopes of peace.
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But the rebels had threatened to pull out of the peace dialogue, although new discussions about the direction of the peace talks took place yesterday.
After the meeting Thailand's army chief General Prayut Chan-O-Cha said authorities were willing to continue talks next month, but urged rebels to end their attacks.
"We regret all of the losses and injuries but if you want to submit demands, you must stop all violence first," he said, adding a key insurgent demand to have the region recognised as an autonomous zone was not possible as it is breached the kingdom's constitution.