Cambodia has offered an apology and compensation to Thailand after riots in its capital this week drove hundreds of Thais to leave the country.

The statement, carried by national TV and radio, blamed Wednesday's riots in Phnom Penh on "extremists" exaggerating reports of attacks on Cambodians in Bangkok.

An immense loss for Cambodia and the Cambodian people itself Government statement

Expressing "most profound regret", the Cambodian Government promised to compensate for the destruction of the Thai Embassy and to safeguard the property of Thais who had fled the country.

Phnom Penh appeared to have returned to normal on Thursday evening apart from a heavy military presence in some areas, particularly around the airport.

There was no sign of mobs, but the Thai Embassy at the focus of the riots is now a burnt-out shell, the BBC's Tony Cheng reports.

In Siem Reap, the town next to the ancient temple complex of Angkor Wat, many restaurants and hotels are boarded up since their Thai owners fled across the border.

Those who remained were being protected by Cambodian policemen and security guards.

'Immense loss'

In its statement, the Cambodian Government made no mention of the incident which reportedly sparked the unrest: an alleged remark by a Thai TV star suggesting that Angkor Wat had been stolen from Thailand.

One Cambodian man died in the riots and seven were injured as mobs attacked Thai-owned businesses and the embassy.

CAMBODIAN-THAI TENSIONS

Thais overran Khmer empire in 15th century Angkor Wat briefly held by Thai army at end of WW2 Border disputes continue Cambodians wary of Thailand's more powerful army Also resent Thai companies exploiting Cambodian natural resources

"The Royal Government would like to express most profound regret for the events which took place and considers that they were an immense loss for Cambodia and the Cambodian people itself," it said.

It attributed the rioting to "the unfortunate instigation of a number of extremists who spread exaggerated news about violence against the Cambodian Embassy and its diplomatic personnel in Bangkok".

Referring to Thailand's evacuation of at least 700 of its nationals, the government promised to create a committee immediately for compensating the Thai Embassy and its staff.

It also promised to protect all the property of companies and Thai nationals who have left Cambodia until their return.

Thai anger

No official response to Cambodia's public offer was immediately forthcoming from Thailand which downgraded diplomatic relations following the riots.

Earlier on Thursday, angry Thais took to the streets of Bangkok to protest and burn Cambodian flags, prompting King Bhumibol Adulyadej to call for calm.

ANGKOR WAT

Symbol on national flag World heritage site Built from 879 - 1191AD 'Lost' for centuries until rediscovered in 1860

Crossing Continents: Cambodia's temples of hope

It was the first time he had stepped into a political crisis for more than 10 years.

Thailand suspended commercial flights between the two capitals and barred Cambodians from entering Thailand.

Analysts say it is unclear what really prompted the rioting, though Cambodian politicians may have been hoping to stir up nationalist sentiment ahead of July elections.

The Angkor Wat complex - Cambodia's national symbol and represented on its flag - sits well inside its borders and has not been disputed by the Thai Government.

Thai Prime Minister Thaksin Shinawatra said troops were on full alert in case of further violence but he called on people to "please understand that the country is not at war".

He said that normal relations with Cambodia could only resume after Cambodia made a full explanation and full compensation.