He quoted Prime Minister Samak Sundaravej as saying that the referendum is the best solution to the problem.
The decision was made at a special cabinet meeting conducted on Thursday at the Supreme Command Headquarter on Chang Wattana Road. The cabinet weekly meeting is on every Tuesday.
The venue of the cabinet meeting has to be relocated after protesters led by People's Alliance for Democracy stormed into and occupied the Government House.
Somsak told reporters that Office of the Council of State of Thailand will consider legislations concerned in conducting the referendum.
Earlier People Power Party's MP Suthin Klangsaeng said earlier his party wanted the people to be the judge in choosing between the government and the PAD.
Suthin suggested for a referendum to be held with three simple questions which the voters could answer by yes or no.
1. Should the government continue in office, resign, or dissolve the House for a snap election?
2. Should the PAD continue or end its protests?
3. Should the PAD's proposal on new politics to revamp the electoral system be accepted?