"Lifting the state of emergency is one of the measures to find a solution for the country. The government wants reconciliation and to move the country forward," Abhisit told parliament on Friday.
The state of emergency, banning gatherings of more than five people and giving government forces additional powers, was imposed on April 12 at the height of anti-government protests.
Known as the Red Shirts, protesters had besieged Abhisit's offices for several weeks and derailed a meeting of regional leaders in nearby Pattaya in an attempt to force the prime minister to resign and call elections.
The Red Shirts, mostly supporters of Thaksin Shinawatra, a former prime minister, called off their own protests last week following street battles with the military and Bangkok residents that left two people dead and more than 130 injured.
'Like Myanmar'
The lifting of the emergency law comes after Thai opposition politicians criticised Abhisit in the parliamentary debate, saying the government's crackdown on protesters bore similarities to tactics used by the ruling generals in neighbouring Myanmar.
"In this region the use of automatic rifles by soldiers to control the crowd can be found in Myanmar, which is a dictatorship," Chavalit Wittayasuth, of the main opposition Puea Thai party, said.
Few parliamentarians, however, proposed concrete solutions and the debate focused on who started the violence.
Thaksin, who continues to be the rallying figure for many Thais, especially the rural poor, despite being mostly in exile since being ousted in a military coup in September 2006, had called on his supporters to overthrow the government.
But he has since urged his supporters to remain peaceful and echoed calls by Abhisit for reconciliation, saying "if the government wants to reconcile, I will encourage the Red Shirts to participate".