* Protest leader wants PM to step down, rejects election
* Will meet military chiefs but shuns PM's reform forum
* Graft body hears case against Yingluck party lawmakers (Adds comments from protest leader)
By Amy Sawitta Lefevre
BANGKOK, Dec 13 (Reuters) - The leader of a protest group trying to overthrow Thailand's government and scrap planned elections said on Friday the prime minister should either step down or be forced out, and his movement would then need around a year to push through reforms.
Suthep Thaugsuban, a lawmaker who resigned from parliament to lead the protest, and his allies have spoken of a volunteer police force, decentralisation of power and electoral reform - but apart from that have been short on specifics.
Prime Minister Yingluck Shinawatra has called an election for Feb. 2 in an effort to end the street protests but Suthep, knowing that allies of Yingluck's brother, former premier Thaksin Shinawatra, would probably win any election, wants an unelected "people's council" to take over.
Suthep said he would meet military chiefs on Saturday to discuss his strategy, but rejected any idea of cutting a deal with Yingluck, who heads a caretaker government now that the king has endorsed the election date.
"I have made a letter to the Supreme Commander to clearly show our intentions," he told demonstrators late on Friday. "Whatever they decide will be up to them."
Yingluck will hold a forum on Sunday to discuss reforms but says they can only be drawn up and implemented after the election. Suthep's group has declined her invitation.
Thailand's eight-year political conflict centres on Thaksin, a former telecommunications tycoon popular among the rural poor because of policies pursued when he was in power and carried on by governments allied to him after he was ousted in a 2006 coup.
Thaksin, who lives in self-exile to escape a jail sentence for abuse of power, gained an unassailable mandate that he used to advance the interests of big companies, including his own. He has dismissed the graft charges as politically motivated.
Ranged against him are a royalist establishment that feels threatened by his rise and, in the past, the military. Some academics see him as a corrupt rights abuser, while the urban middle class resent what they see as their taxes being spent on wasteful populist policies that amount to vote-buying.
They see Yingluck as the puppet of Thaksin, who is thought to determine government policy and has been known to address cabinet meetings by Skype.
"They have used the parliamentary system in the wrong way to help just one group of people ... to wash the guilt of Thaksin Shinawatra," Suthep said, referring to a political amnesty bill that acted as a catalyst for the current crisis.
"SOFT WAY OUT"
Suthep said his group would not attempt to drag the monarchy into the crisis, but he accused Yingluck of being disloyal to King Bhumibol Adulyadej by failing to honour a promise she made to him when she took office that she would work for the country.
Such allegations carry a lot of weight in Thailand, where the king is much revered. The military cited disloyalty to the monarchy when it overthrew Thaksin.
The "soft way out" of the impasse, Suthep said, was for Yingluck to quit and let his council push through reforms. Failing that, the people would simply seize power, he said.
"Once we complete this in 12 to 14 months' time ... everything will return to normal," Suthep said.
The number of protesters on the street has dwindled to just a few thousand from 160,000 on Monday, when Yingluck announced the snap election, but Suthep shows no sign of giving up.
The focus is now on the meeting between the chiefs of the armed forces, Suthep and other interested parties which, according to a statement issued by the military, aims "to find a way out for Thailand".
The politically powerful army has staged or attempted 18 coups in the past 80 years, including the ousting of Thaksin in 2006, and its motives now are unclear. It has declined to get involved in the crisis so far but has offered to mediate.
On Thursday, Suthep sought to drum up support for his plans at a meeting with business leaders, talking of a "people's assembly" of up to 400 members from a cross-section of society. His protest movement, he said, would get 100 of the seats.
Another front could open up against Yingluck on Friday, when Thailand's corruption watchdog started a hearing into whether 312 lawmakers from her Puea Thai Party acted illegally in trying to push through a change to the constitution, another spark for the street protests.
The lawmakers voted for a change that would have made the Senate a fully elected body, which was ruled illegal by the Constitutional Court. At present just under half of the members of the upper house are appointed.
Any case would be handled by a Supreme Court that has previously dissolved two parties allied with Thaksin and banned executives from politics for five years. A ruling could take months, although judgments have been sped up in past crises. (Additional reporting by Panarat Thepgumpanat and Martin Petty; Writing by Alan Raybould; Editing by Andrew Roche)