The warning from government officials comes as King Gyanendra squared off against opposition politicians and rebels who have threatened to disrupt the vote.
Hours earlier, Maoist rebels killed seven police officers and soldiers in two attacks.
The municipal elections, billed as a small but significant step back towards democracy, are Nepal's fist vote in seven years.
They have been seen as an effort by the country's absolute king to quell the long-running power struggle between the monarchy, political parties and Maoist rebels.
Instead, they appear only to have exacerbated it, with rebel attacks and wildcat protests becoming near-daily occurrences in Nepal.
The insurgents have threatened to kill anyone who takes part in the vote - two candidates have already been slain - prompting the government to take out life insurance policies worth up to 700,000 Nepali rupees ($10,300) for the more than 2000 candidates.
Nearly all the major political parties are boycotting the vote, calling it a sham intended to legitimise the rule of King Gyanendra, who seized power last year. They have said they plan to peacefully disrupt the vote.
Krishna Sitaula, of the Nepali Congress, said: "We have instructed all our supporters and cadres to go the polling stations in their areas and do whatever they can to stop voting."
Gyanendra's government has responded by rounding up hundreds of politicians, activists and journalists.
"We have instructed all our supporters and cadres to go the polling stations in their areas and do whatever they can to stop voting"
The result of the rebel threats, an opposition boycott and government intimidation has been candidates registering in less than half of the more than 4000 races for mayors and local officials.
Kamal Thapa, the Home Minister, said the lack of candidates meant there would be votes in only 36 towns and cities either because there were no candidates or because contenders ran unopposed in the other 22 municipalities.
Nepal has a population of 27 million. However, it remained unclear how many people would actually get to polling stations after the government ordered all vehicles off the roads, fearing rebel attacks.
But officials said tens of thousands of government workers were ordered to vote.
Thapa told reporters that soldiers and police have also "been instructed to use ultimate force if there are any attempts to disrupt the polls or harm the voters".
The king seized power on 1 February last year, claiming the move was necessary to defeat the Maoists.
But fighting has persisted and the economy has only worsened - per capita income is less than $25 a month.
The rebels decade-long fight for a communist state has cost 12,000 lives.