A Thai princess will run for prime minister in March elections in an unprecedented entry by a royal into frontline politics, pitting her against the chief of the ruling junta and redrawing the nation's political landscape.

Princess Ubolratana, 67, the older sister of Thai King Maha Vajiralongkorn, was announced as a candidate for the Thai Raksa Chart party steered by the divisive Shinawatra political clan.

The Thai monarchy, a revered institution shielded from criticism by a tough defamation law, has traditionally been seen as above the political fray, although royals have intervened in moments of political crisis.

Ubolratana's nomination has electrified the buildup to a March 24 election which had seemed poised to return the junta and its proxies to power in some form.

Her involvement gives a royal sheen to Thaksin Shinawatra's political machine, which has won every election since 2001. And it also potentially builds a bridge between Thaksin's "Red" shirted supporters and the "Yellow" shirts who are arch royalists. Deadly violence and disruption linked to the two groups has defined Thailand's turbulent last decade.

"The board agrees that the name of Princess Ubolratana, an educated and skilled person, is the most suitable choice," Thai Raksa Chart party leader Preechapol Pongpanich told reporters.

The party falls under the tutelage of Thaksin, a billionaire self-exiled former premier, who stands at the heart of Thailand's bitter political schism — loathed by the army and Bangkok elite, yet adored by the rural poor.

The announcement thrusts him back to the centre stage of Thailand's political drama just as it appeared the military were set to succeed in sidelining him.

He was toppled in a 2006 coup, while his sister Yingluck was booted from power in a 2014 military takeover and forced into exile to avoid a jail term.

The princess's move deals a heavy blow to the aspirations of Prayut Chan-O-Cha, the junta head, who has spent nearly five years trying to recast the political system to limit the power of elected governments and prepare his own return as a civilian leader. In a day of high drama, Prayut declared his candidacy for premier, running for the Phalang Pracharat army party, moments after the princess's announcement.