* Army chief to meet political parties, rival protest groups
* Army declared martial law on Tuesday, denies staging coup
* Acting PM says he is still in charge, has proposed Aug. 3 election
* Anti-government protesters oppose an early election
* Pro-government "red shirts" warn of trouble if government ousted (Adds army chief calling meeting, analyst comment)
By Panarat Thepgumpanat and Amy Sawitta Lefevre
BANGKOK, May 21 (Reuters) - Thailand's army chief summoned leaders of rival political groups and parties, Election Commission members and senators to a meeting on Wednesday, a day after he declared martial law, to discuss a way out of the country's political turmoil.
Although the military denied Tuesday's surprise intervention amounted to a coup, General Prayuth Chan-ocha appears to be setting the agenda by forcing groups and organisations with a central role in the crisis to meet.
"General Prayuth has called a meeting at the Army Club with all sides to talk about ways out of the country's crisis," deputy army spokesman Winthai Suvaree told Reuters, adding it would start at 1:30 p.m. (0630 GMT).
The Election Commission was meeting separately during the morning to consider the caretaker government's proposal of an Aug. 3 election.
Anti-government protesters disrupted an election in February that was later annulled. They have said they will do the same for any re-run held before electoral changes designed to reduce the influence of ousted former premier Thaksin Shinawatra.
Twenty-eight people have been killed and 700 injured since this latest chapter in a near-decade-long power struggle between Thaksin and the royalist establishment flared up late last year.
The turmoil has brought the country to the brink of recession and raised fears of civil war.
General Prayuth said he had imposed martial law to restore order, and the caretaker government says it is still running the country.
"Certainly, it's not an outright military coup by definition because the caretaker government is still in office, but on the ground it looks like the military is in charge," said Thitinan Pongsudhirak, a political analyst at Chulalongkorn University.
He said Prayuth needed to convince everyone with a stake in the outcome of the need for "reforms before and after elections".
"He's taking a lot of risk, Prayuth, because the imposition of martial law puts him in a very tight spot ... The longer we do not see a resolution, the riskier it will become for the army," Thitinan said.
Both pro- and anti-government protesters remain out in force, but the army has confined them to their separate protest sites in and around Bangkok and there were no reports of trouble overnight.
The anti-government protesters want a "neutral" prime minister installed to oversee electoral reforms. The government, on the other hand, wants a general election that it would probably win, given Thaksin's enduring support among the rural and urban poor.
Acting Prime Minister Niwatthamrong Boonsongphaisan, who took over when Thaksin's sister, Yingluck Shinawatra, was forced to step down as premier by a court two weeks ago, proposed on Tuesday that an election should be held on Aug. 3.
Somchai Srisutthiyakorn, a member of the Election Commission, said all sides had to consider the proposal.
"The situation has changed now. We have martial law, therefore the Election Commission, the army and the government should talk first," Somchai told Reuters. "I can't say yet whether an August 3 election will happen."
The United States, which cut aid to its military ally after Thaksin was toppled in the most recent of Thailand's frequent military coups in 2006, called on the army to respect "democratic principles".
"We're watching the situation very closely. We expect that the Thai Army will be true to its word when it says that this is not a coup and this is just a temporary injunction," said Pentagon spokesman Rear Admiral John Kirby.
Thaksin's "red shirt" activists have warned of trouble if the caretaker government is ousted and replaced with a "neutral" prime minister but some analysts saw that as likely despite the threat of a backlash.
"With martial law in place, we believe violence could be contained," Pimpaka Nichgaroon, head of research at Thanachart Securities, wrote in a note.
Pimpaka said the main question was whether an interim government came about through a coup or through a resolution by the upper house Senate, Thailand's only functioning legislature.
"Any kind of interim government would be a better scenario for Thailand than the current political deadlock with a non-functional caretaker government."
The present administration has only limited authority and is unable, for example, to push through fiscal policies to support an economy in danger of sliding into recession because of the damage to confidence from the political turmoil.
The army has ordered 14 satellite TV channels, both pro- and anti-government, to stop broadcasting and it has warned against the spread of inflammatory material on social media.
Human rights groups have said the declaration of martial law was akin to a coup. (Writing by Robert Birsel and Alan Raybould; Editing by Alex Richardson)