* Supporters of ousted Prime Minister Yingluck gather
* Rival demonstrations raise fears of clashes
* Anti-govt protest leader: Caretaker government illegal (Adds comment from government supporter, crowd size)
By Amy Sawitta Lefevre
BANGKOK, May 10 (Reuters) - Supporters of Thailand's beleaguered government gathered on Saturday on the outskirts of Bangkok, saying they were determined to safeguard democracy as rival anti-government protesters pressed their campaign in the city.
Thailand's politicians have been unable to forge a compromise over a nearly decade-long split between the royalist establishment and a populist former telecommunications tycoon, whose sister, Yingluck Shinawatra, was ousted as prime minister on Wednesday.
Her sacking by the Constitutional Court for nepotism followed six months of sometimes violent anti-government protests that have unnerved investors, frightened away tourists and dented growth in Southeast Asia's second-biggest economy.
Yingluck's supporters have derided her removal as a "judicial coup". Her brother, former prime minister Thaksin Shinawatra, was ousted in a military coup in 2006.
"This is a dictatorship that masquerades as a democracy," Sombat Thammasuk, 44, a "red shirt" supporter of Thaksin and Yingluck, said at the rally.
A government security official said about 50,000 people had joined the rally and more were expected. They gathered under a sweltering sun and many said they were prepared to stay for days to press for an election.
"Although it is hot out here our anger is hotter, we are boiling with anger. I am ready to give this fight everything I've got," said Sombat
A day after Yingluck was thrown out of office she was indicted by an anti-corruption agency for negligence over a rice subsidy scheme that ran up huge losses. The upper house Senate is expected to impeach her for that, which would result in a five-year ban from politics.
But Yingluck's Puea Thai party still runs a caretaker government and is hoping to organise a July 20 election that it would probably win.
Anti-government protesters want the government out, the election postponed and reforms to end Thaksin's influence.
Protest leader Suthep Thaugsuban, a former deputy premier in a government run by the pro-establishment Democrat Party, called his supporters out onto Bangkok's streets on Friday for what he says will be a final push to get the government out.
He then wants to install a "people's council" to oversee reforms aimed at excluding Thaksin from politics.
"The caretaker government is unlawful, which means at this stage, Thailand has no real government," Suthep told reporters at a rally.
He called on the upper house Senate, the judiciary and Election Commission to appoint a neutral prime minister.
Suthep's supporters held rallies and blocked some roads on Saturday but there were no reports of violence. Both the pro- and anti-government camps have armed activists within their ranks and the rival protests this weekend, even though they are far apart, have raised fears of trouble.
"WILL NOT STAND FOR IT"
Jatuporn Prompan, leader of the "red shirt" supporters of Thaksin and Yingluck, told reporters at the pro-government rally Suthep's proposal was "impossible".
"It is clear that Suthep thinks there is no government ... that he is looking to the Senate to install a neutral prime minister. This is illegal," Jatuporn said.
"If they install an interim prime minister we will escalate our fight for sure. We will not stand for it," he told Reuters.
Thaksin lives in self-exile to avoid a jail term handed down in 2008 for corruption but has been a major influence over his sister's government.
He won huge support in the north and northeast with pro-poor policies, rallied provincial power brokers to his party and was increasingly seen as a challenge to the Bangkok-based establishment.
He or his loyalists have won every election since 2001. But his enemies say he is corrupt and buys votes and they want to change electoral rules before new polls.
The army, which has staged numerous coups since the end of absolute monarchy in 1932, has stayed out of the turmoil but substantial violence would raise the possibility of military intervention.
King Bhumibol Adulyadej, 86, the world's longest-reigning monarch, has stepped in to defuse previous crises but has not commented on this one since it blew up late last year.
One undercurrent of the crisis is deep anxiety over the issue of royal succession. The king spent the years from 2009 to 2013 in hospital.
Crown Prince Vajiralongkorn does not command the same devotion as his father.
(Writing by Robert Birsel; Editing by Nick Macfie and Raissa Kasolowsky)