(Updates with fresh quotes)
BANGKOK, Nov 26 (Reuters) - Thailand's army told the government on Wednesday to step down and call an election, and ordered the People's Alliance for Democracy (PAD) to cease their street protests, as a way out of a worsening political crisis.
A spokesman for Prime Minister Somchai Wongsawat said the government rejected the compromise proposal laid out by army chief Anupong Paochinda at a news conference.
The PAD also rejected the idea, saying they would not cease their campaign, including the blockade of Bangkok's main international airport, until Somchai went.
* "The prime minister has said many times that he will not quit or dissolve parliament because he has been democratically elected. That still stands," government spokesman Nattawut Saikuar told Channel 3 television.
* It is not the first time Anupong has tried, and failed, to remove Somchai via the media.
Last month, he and the heads of the navy, air force and police used a prime time television interview to say he should have stood down after bloody clashes between police and PAD protesters outside parliament.
Somchai, the brother-in-law of ousted leader Thaksin Shinawatra, simply reiterated the line that he was democratically elected, and said Anupong was entitled to his own opinions.
* Even though Anupong appeared to be trying to be even-handed, sources within a pro-government protest group said that if Somchai quit, they would regard it as a coup and immediately launch anti-military demonstrations.
"There will be war for sure," one senior member of the Democratic Alliance Against Dictatorship told Reuters.
* Due to continuing support for Thaksin in the countryside and among the urban poor, any election would be likely to return a pro-Thaksin government that would be as unpalatable to the PAD as the current administration.
As such, the entire crisis would return to square one, unless the PAD, and its allies in the opposition Democrat Party, pledged to honour the result. (Reporting by Ed Cropley; Editing by Alan Raybould and Bill Tarrant)