The two sides have agreed to a joint border patrol aimed at preventing a repeat of Wednesday's clashes which killed two Cambodian soldiers near the ancient Preah Vihear temple, but there was no word on when they would start.
Prime Minister Hun Sen said that talks remained the best solution to the dispute over land around Preah Vihear, a UN World Heritage site on Cambodian territory and the focus of months of tensions.
"There will be no large-scale armed conflict because the two countries can still be patient," Hun Sen told reporters after meeting with his cabinet.
At the weekly meeting, ministers held a moment of silence for the Cambodian solders who died. Seven Thais were also wounded in the clashes.
"Today our cabinet, with the pride we received from protecting our territory, will discuss draft laws (to put the) national defence sector on top," Hun Sen said, without elaborating on specific steps.
While Thailand has a 300,000-strong armed forces and a well-equipped air force, Cambodia's much smaller military is badly equipped, badly trained and disorganised, according to a Western military official in Bangkok.
Many of their Cold War-era weapons mis-fired during this week's shooting, soldiers along the border said.
Hun Sen also rejected the help of mediators -- a U-turn from Cambodia's position earlier this year when officials spoke about bringing the land dispute to the United Nations Security Council.
"I think that it is not time yet (for mediated talks) because Cambodia and Thailand agreed to resume negotiations within existing mechanisms," Hun Sen told reporters.
Thai and Cambodian military officials met Thursday to try to calm the situation after the clashes, but there were few results from the meeting apart from an agreement in principle to jointly patrol the disputed areas.
"Today we received the order to be well-prepared. The joint patrols have not yet been put in practice," said Cambodian Major Menly, who oversees more than 100 troops at the frontlines of the disputed border.
Thai and Cambodian soldiers appeared more relaxed Friday, with some even stashing way their rifles and rocket launchers.
"The situation is less tense," Thai border task force commander Major General Kanok Netrakavaesana said.
The eruption of violence this week came after talks on Monday about the border dispute ended in failure, with Hun Sen warning of armed conflict and the Thai army saying it was prepared for a confrontation.
Troops began massing on both sides of the border, while Thailand sent tanks and heavy weaponry to the area and put fighter jets on stand-by.
After the clash, the United Nations, United States and European Union heaped pressure on Thailand and Cambodia to exercise restraint, and leaders in both nations said they were committed to avoiding further conflict.
But the neighbours have blamed each other for starting the violence.
Thailand has also accused Cambodia of planting landmines which injured two Thai troops on the border earlier this month, breaching the international treaty banning the use of landmines, which Thailand and Cambodia have signed.
Officials in Cambodia, however, deny that they were fresh mines, and said they were remnants from their three-decade long civil war.
The current standoff first flared in July after Preah Vihear was awarded heritage status, angering some Thai nationalists who claim ownership of the site.
The situation quickly escalated into a military confrontation, with up to 1,000 Cambodian and Thai troops facing off for six weeks, although both sides in August agreed to reduce troop numbers in the main disputed area.
The Cambodian-Thai border has never been fully demarcated, in part because it is littered with landmines left over from decades of war in Cambodia.
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