Prime Minister Yingluck Shinawatra, who is Thaksin´s younger sister, has yet to confirm or comment on a move that has already attracted harsh criticism from the opposition. [break]
The draft, which needs to be approved by King Bhumibol Adulyadej, would grant an amnesty to "convicts who are at least 60 years old and are sentenced to under three years in jail", according to the Bangkok Post English daily.
Amnesties are granted each year on the king´s birthday on December 5.
Thaksin, who was ousted by the army in a 2006 coup, is 62 years old and lives in self-imposed exile in Dubai to avoid a two-year prison term for corruption.
Political novice Yingluck, 44, led the Puea Thai party to victory in a July election on the back of her brother´s popularity among Thailand´s rural poor and is widely seen as his political proxy.
File photo of former Thai prime minister Thaksin Shinawatra. (AFP)
She was absent from Tuesday´s cabinet meeting because she was visiting a flood-stricken province, reports said.
The return of Thaksin, a deeply divisive figure in Thailand, would likely anger his foes in the Bangkok-based elites in the military, palace and bureaucracy and could spark further turmoil after years of violent protests.
It would also come at a politically sensitive time for Yingluck who has faced strong criticism in recent weeks for her handling of Thailand´s worst flood crisis in half a century.
The reported amnesty plan was immediately criticised by the opposition Democrats, whose own amnesty decree last year excluded corruption convictions.
"It shows that what they have done is intended to help one person," Democrat deputy party spokesman Sakoltee Phattiyakul told AFP, predicting the move would make for a "tense" political situation in the kingdom.
"Because even though the floods are not yet over, the cabinet still approved the decree," he said.
After his sister´s election win, Thaksin said setting foot back in Thailand was not a priority, but he has previously expressed hopes to be at his daughter´s wedding in December.
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