The army on Friday said its troops killed the rebels after the insurgents attacked their base on Thursday night using rocket launchers and mortars in the west of the nation in one of the deadliest battle in the past two months.
An army statement said many more Maoists, possibly hundreds, could have died in the fighting and soldiers had recovered 31 weapons, including AK-47 assault rifles.
"On the basis of the situation at the site of the clash and on the version of local people, it is understood that hundreds of terrorists have died," it said.
"Only 50 bodies have been recovered so far."
These figures could not be independently verified and the Maoists have not commented on the latest fighting.
"On the basis of the situation at the site of the clash and on the version of local people, it is understood that hundreds of terrorists have died"
Nepali army statement
Nine soldiers were wounded at the base in Khara in Rukum district, 550km west of Kathmandu, three of them critically.
The latest assault by the Maoists - who want to overthrow the monarchy and establish a communist republic - comes after an attack five weeks ago in which the army said its forces had killed at least 50 rebels in the western Bardiya district.
Four soldiers also died in that clash.
The new violence came as police in Kathmandu arrested about 50 political activists, including some former ministers, who were demonstrating against King Gyanendra's move on 1 February to declare emergency, sack the multi-party government and seize power.
Protests marked the anniversary
of democracy established in 1990
"Down with the proclamation of emergency. Long live democracy," some protesters shouted, waving party flags above their heads before being dragged away by helmeted policemen.
About 450 more activists were arrested in pro-democracy gatherings elsewhere in Nepal. In the eastern towns of Janakpur, Sarlahi and Mahottari, dozens of activists were injured after police used batons to break up protests.
In the capital Kathmandu pro-democracy protesters who appeared suddenly in ones and twos were quickly arrested, bundled into iron-meshed vans by police and driven away.
Friday's protests coincided with the anniversary of the establishment of multi-party democracy in 1990.
The protests took place as an 11-day strike called by the Maoists against the king's power seizure continued to disrupt supplies within the kingdom. The strike ends on Tuesday.