The landslide victory marks the first time in the Thai history that a single party has captured a majority of the parliamentary seats in a free election.
The win, which easily exceeds Thaksin's previous goal to seek 350 seats in the parliament, also enables him to become the kingdom's first civilian prime minister to serve out a full four-year term.
Opposition leader Banyat Bantadtan quickly conceded defeat after the projection.
"I was shocked when I saw the exit polls. However, we have to accept it whatever the official results will be since it's the people's mandate," he said.