"To show our greater responsibility towards the general public, we have decided to call off the ongoing nationwide indefinite transport blockade as of Saturday," the statement said on Saturday. 

The blockade, which began on 12 February, had slowed to a trickle the movement of traffic in and out of the ancient capital Kathmandu and sent market prices of vegetables, fruit and other foods soaring. 

Prachanda, also known as the Fierce One, warned of a nationwide general strike next month unless the king gave up his power grab. 

"We will be watching political developments in the country," Prachanda said in the statement. "If there are no changes, our party will be obliged to observe an indefinite nationwide general strike from next month (starting on 14 March)."

Emergency rule

In a move widely condemned internationally, King Gyanendra declared emergency rule - including press censorship - and sacked the government on 1 February for what he said was its failure to deal with the insurgency. 

Gyanendra has offered unconditional peace talks with the rebels, who have denounced him as the "great betrayer." 

The rebels have been fighting for a communist republic in the impoverished Himalayan kingdom wedged between India and China since 1996. 

The conflict has claimed more than 11,000 lives.