Gen Panlop currently serves as an adviser to caretaker Prime Minister Yingluck Shinbawatra, Thaksin's sister.
Reports that the retired general would be given a role on the CMPO were totally baseless, said Lt Gen Paradorn Pattanathabut, the secretary-general of the National Security Council.
Pheu Thai deputy spokesman Anusorn Iamsa-ard had said on his Facebook page that Gen Panlop had returned to help the CMPO to deal with an "unknown force".
Gen Panlop said he had not been approached to join the CMPO by anyone from the caretaker government.
He said, however, that as an adviser to the caretaker premier, he was ready to work for the country as ordered, because the country was now unable to move forward.
Gen Panlop, the former deputy chief of the Internal Security Operations Command (Isoc), has a close relationship with Thaksin and has visited him at various locations abroad on several occasions.
The tough-talking military man was also a close associate of Maj Gen Khattiya Sawasdipol, alias "Sae Daeng", who trained and led armed militants during the red-shirt protests in 2010 before he was assassinated by a sniper.
Lt Gen Paradorn said he saw no need to enlist Gen Panlop's services at this time.
On the one hand, having the general on the CMPO could signal an intention to get tough with anti-government protesters.
On the other hand, he said, Gen Panlop's reputation of having a fondness for violence would be used to attack the caretaker government for planning to use force against protesters.
The Civil Court this week upheld the government's declaration of a state of emergency but said it could not use force to disperse protesters.