On Friday, King Vajiralongkorn denounced his sister Princess Ubolratana Mahidol's unprecedented bid for political power as inappropriate.
Thai Raksa Chart is a pro-Thaksin Shinawatra party, and Princess Ubolratana is known to be a long-time friend of the Shinawatra family, which has an influence in the upcoming election through its proxy political parties, although they have not fielded a family member directly this time.
"All members of the royal family must abide by the king's principle of staying above politics, maintaining political impartiality and they can not take up political office", part of the statement released to the media said.
Ubolratana's involvement for a party allied to Shinawatra - a billionaire self-exiled former premier, who stands at the heart of Thailand's bitter political schism - gives a royal sheen to his political machine, which has won every election since 2001.
She returned to Thailand in 2001 from the USA after her divorce and has since regularly taken part in charity, social welfare and health-promoting events as well as anti-drug campaigns for youths.
A total of 500 elected members of parliament and 250 senators selected by the ruling National Council for Peace and Order will jointly vote to choose the new prime minister.
The Election Commission echoed the King's royal command issued late on Friday, which said 67-year-old Ubolratana's plan to enter politics - aligned with the powerful Shinawatra clan - was against the constitution.
The commission's list did include Thailand's current prime minister and junta leader Prayuth Chan-ocha, running under the banner of the pro-military Palang Pracharat Party which is widely expected to win.
The gambit of nominating a member of the royal family could backfire on Thai Raksa Chart, said Titipol Phakdeewanich, dean of the faculty of political science at Ubon Ratchathani University.
After unusually blunt criticism from King Vajiralongkorn, the Thai Raksa Chart party had no choice but to accept his instruction that members of the royal family could not be brought into politics.
Thailand's monarchy is deeply revered in society, and has been seen as a unifying force above the divisions in the country.
In an Instagram post this weekend she thanked Thais who had supported her but did not address the King's comments.
But the decision leaves the party without a prime ministerial candidate.
She said she wanted to exercise her rights as an ordinary citizen by offering her candidacy for prime minister.
The Thai general election this year "had been broadly viewed as a straightforward battle between Thaksin's populists and their allies, on the one hand, and the royalist-military establishment on the other", according to CNA.