BANGKOK -- Thai Prime Minister Thaksin Shinawatra denied on Monday that his ruling party had lost its appeal among voters in the capital after it came second to its main opposition rival in elections for the City Council.

Thaksin said his populist Thai Rak Thai (Thais Love Thais) Party (TRT) had done well considering it was contesting the Bangkok local election for the first time.

"Thai Rak Thai never had members in the local Bangkok Council, so with the amount we won this time I think we've made a substantial gain," Thaksin told Reuters.

Of 61 City Council seats, Thai Rak Thai won 25 while the main opposition Democrat Party won 28. The Chart Thai and Chart Pattana parties, minor partners in Thaksin's coalition, won three seats between them.

Four years ago, when the last City Council elections were held, the Thai Rak Thai Party had not yet been formed and the Democrat Party dominated the council.

But at the last general election in January 2001, won by Thaksin with the biggest ever haul of seats for a party, Thai Rak Thai won 78 percent of Bangkok's parliamentary constituencies while the democrats won 22 percent.

Sunday's city elections suggested a considerable drop in support for Thaksin compared with the general election. But the two elections cannot be directly compared, as local issues and personalities play a far greater role in City Council elections.

Thai Rak Thai had earlier said it expected to win about 40 seats but Thaksin on Monday blamed a low turnout for the lower-than-expected tally.

Thaksin swept to power promising faster economic growth and policies designed to put the welfare of the Thai people ahead of the interests of foreign businesses.

But economic growth in 2001 was much slower than expected, and Thaksin has been widely attacked in the media over allegations that he has tried to muzzle the press, has a high-handed approach to government and has a poorly formulated foreign policy agenda.

Thaksin has dismissed the criticism and says his policies are on track. Another general election does not have to be held before 2005.