A further 300 protesters will remain in custody for further questioning, Thai Prime Minister Thaksin Shinawatra said.
Tensions have been high following the deaths of 78 protesters in police custody. Most died of suffocation after being loaded onto army trucks.
Mr Shinawatra has set up an independent inquiry into the incident.
The BBC's Kylie Morris in Bangkok says the government appears to have embarked on a campaign to calm tensions in the south of the country.
It follows a week of violence, which began with a protest outside a police station in Takbai, Narathiwat province, on Monday.
As the protest turned violent, seven people were killed in clashes with security personnel.
More than 1,000 people were arrested; 78 suffocated after being loaded into trucks and taken to army barracks.
'No hidden agenda'
Thailand's minority Muslim community - based almost exclusively in the country's southern provinces - has been at loggerheads with Bangkok for decades.
Thailand's Muslims often complain of discrimination and a lack of opportunities.
In a televised address on Friday, Mr Thaksin sent condolences to relatives of the dead and vowed to punish those responsible.
He described the crowd at the demonstration as a mix of criminals and law-abiding citizens.
SOUTHERN VIOLENCE 25 Oct: Protest in Narathiwat turns bloody - 85 dead26 Oct: Muslim separatists vow revenge 28 Oct: Bomb attack in Narathiwat - 2 dead 29 Oct: Two blasts in Yala - about 20 injured |
And he blamed the deaths of the 78 men on a shortage of army trucks and poor decisions by the military.
Announcing an independent commission into the events, he said: "The government must not conceal any fact, as the government has no hidden agenda."
The incident has fuelled anger among Thailand's Muslims, and at Friday prayers people were both angry and sad at the week's tragic events.
"Why did this have to happen to our Muslim brothers?" said Mayawewe Keada, a worshipper at the Wadi al-Hussein mosque, about 50 km (30 miles) from the scene of Monday's protests.
Muslim leaders warned of further violence in the troubled region.
On Thursday, two people were killed in a bomb attack in Sungai Kolok, Narathiwat, on the Malaysian border.
At least 19 people were injured in two bombs in Yala province on Friday.
http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/asia-pacific/3967151.stm
Published: 2004/10/30 08:10:43 GMT
© BBC MMIV
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