Reporters at the scene say they heard gunfire, but police said they only fired tear gas.
"It was absolutely necessary for police to use tear gas to break up the crowd," Major-General Anan Srihiran told Reuters.
"We only wanted to open up a road for the cabinet to enter parliament. We will not do anything else to the protesters for the rest of the day."
Television footage showed police firing gas canisters and clouds of white smoke on the road where the protesters had erected tyre and barbed-wire barricades.
Late on Monday Somchai said after an urgent two-hour cabinet meeting that his speech would "take place as scheduled" in parliament.
Under Thai law, cabinet ministers can implement projects only after they are formally announced in parliament.
Four-month campaign
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| Protesters had set up tyre and barbed-wire barricades to block access to parliament [EPA] |
Protesters led by the People's Alliance for Democracy (PAD) gathered in front of parliament on Tuesday, joined by thousands of supporters waging a nearly four-month old campaign to unseat the government.
"No matter how hot it will be, how heavily it will rain, how hungry you will be, or how desperately you want to go to toilet, you must surround parliament to prevent this government from delivering its policy to parliament," Sondhi Limthongkul, a PAD leader, said on stage at Government House.
Protesters have occupied the grounds of Government House, home to the government's offices, since late August.
The PAD, a coalition of businessmen, academics and activists, accuse Somchai of being a political proxy for his brother-in-law, Thaksin Shinawatra, who was removed in a 2006 military coup.
Somchai has tried to open a dialogue with the PAD since he replaced Samak Sundaravej, who was removed from office by a court order last month and whom the PAD also accused of being a Thaksin proxy.
But talks have not started and there has been little prospect of the PAD ending its protests.