UPDATE 1-Supporters of former prime minister rally in Bangkok

* Thaksin calls for "national reconciliation"

* "Red shirts" to petition Thai King to exonerate Thaksin (Updates after Thaksin phone-in)

By Kittipong Soonprasert

BANGKOK, June 27 (Reuters) - Thousands of "red shirt" supporters of ousted Thai prime minister Thaksin Shinawatra rallied in Bangkok on Saturday in their biggest protest since sparking violent clashes two months ago.

The United Front for Democracy against Dictatorship (UDD), better known as the "red shirts", gathered in the capital to demand that Prime Minister Abhisit Vejjajiva dissolves parliament and calls an election.

Six hundred police were on duty and hundreds more on standby at Sanam Luang, a public square near Bangkok's Grand Palace.

The exiled Thaksin, who was blamed for instigating riots by "red shirt" demonstrators in April, addressed the crowd by telephone and accused Abhisit's government of mismanaging the economy, raising taxes and plunging the poor into debt.

He pledged his loyalty to his supporters and called for all Thais to put aside their differences.

About 20,000 protesters braved the pouring rain to listen to the hour-long address by the former telecoms tycoon, who was ousted in a 2006 coup and fled Thailand last year to avoid a two-year jail sentence for graft.