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Thailand's king has commuted former prime minister Thaksin Shinawatra's eight-year prison sentence to one year, the royal gazette said on Friday, a day after the billionaire submitted a request for pardon.

The country's most famous politician returned to Thailand last week in a dramatic homecoming after 15 years abroad in self-exile to avoid jail time after he was ousted by the military in 2006.

He arrived on a private jet and was transferred to prison to serve an eight-year sentence on charges of abuse of power and conflicts of interest from during his time in power. On the first night, he was moved to a police hospital over chest pains and high blood pressure.

On Thursday he submitted a request for a royal pardon.

Thaksin "was a prime minister, has done good for the country and people and is loyal to the monarchy," the royal gazette said on Friday.

"He respected the process, admitted his guilt, repented, accepted court verdicts. Right now he is old, has illness that needs care from medical professionals," it read.

Despite being away for 15 years, Thaksin remains an influential figure in Thai policies with parties loyal to him winning every election since 2001 until this year.

His return overshadowed a vote in parliament that installed political ally Srettha Thavisin of the Shinawatra-backed Pheu Thai party, as prime minister.

Srettha, a real estate tycoon, received support from pro-military and conservative parties connected to the same generals who ousted Thaksin's governments in 2006 and 2014.

Thaksin's return and time in hospital have fuelled speculation that he has struck a deal with those very rivals among the country's powerful generals and conservative old money elites - something he and the Pheu Thai party deny.

He remains hospitalised, with authorities citing the need for specialists and advanced medical equipment for his treatment.

"It is his majesty's grace that showed Thaksin mercy," the former leader's lawyer Winyat Chatmontri told Reuters, referring to King Maha Vajiralongkorn.

"Thais should accept and not criticise this outcome because it could be considered a violation of royal power," he said.

Thailand's strict royal insult law shields the monarchy from criticism, carrying a prison sentence of up to 15 years. (Reuters)