On Saturday, a day after the king's address on national television, protesters again returned to the streets of the capital chanting slogans and waving flags.

"The royal proclamation is a sham," many shouted, saying they wanted the king's powers to be limited by a new constitution.

On Friday King Gyanendra appeared to bow to more than two weeks of protests, saying: "Executive power of the kingdom of Nepal, which was in our safekeeping, shall from this day be returned to the people."

He called for "a meaningful exercise in democracy" with  elections "as soon as possible" to restore peace to the country.  

His announcement followed weeks of mass protests against his direct rule during which have left at least 12 people dead.

In his address the king called on the seven-party opposition alliance "to recommend at the earliest a name for the post of prime minister who will have the  responsibility to run the government."

"We are committed to multi-party democracy and to constitutional  monarchy," said the grim-faced monarch.  

Offer rejected

"We are committed to multi-party democracy and to constitutional  monarchy"

King Gyanendra

Nepali political parties, however, rejected the king's offer as insufficient.

"The king has not clearly addressed the road map of the protest movement," said Krishna Prasad Sitaula, a party spokesman. "Our protest campaign will continue."

"The king has been defeated but the defeat is not complete,"  said Nepali Congress-Democratic party spokesman Minendra Rijal.

"He says he is giving power to the people but the statement is  influenced by his own agenda focusing on general elections," he  said.  

"Anything less" than elections to a constituent assembly was  "now unacceptable".  

Anti-monarch protests have
swept the kingdom

"To make sure that the autocracy is completely defeated, the  movement will go on," he vowed.

Earlier on Friday over 100,000 pro-democracy activists had gathered on the edge of the capital Kathmandu in protest at the king's rule.

The Nepali government had imposed a daytime curfew on the capital and ordered those breaking it be shot on sight in a desperate attempt to halt the demonstrations that have disrupted the country for over two weeks.

King Gyanendra dismissed the government in February last year, saying it had failed to defeat Nepal's Maoist insurgency, which has left more than 13,000 people dead.

"The king has been defeated but the defeat is not complete"

Minendra Rijal,
Nepali Congress-Democratic party spokesman

He had also come under intense international pressure to make concessions to the protesters.

Hours before his speech, James Moriarty, the US ambassador, said the king's time was "running out".

"Ultimately the king will have to leave if he doesn't compromise."

On Thursday, India sent a top envoy to Kathmandu to tell the king he had to open a real dialogue with the opposition to halt the bloodshed.