Marking the Nepali New Year, Bikram Sambat 2063 on Friday, Gyanendra called on multi-party elections in April 2007.
But Bam Dev Gautam, a senior member of the opposition Seven Party Alliance (SPA), believes the opposition is unlikely to agree.
"I don't see any possibility of any agreement whatsoever between the palace and the SPA. I think the king will have to restore the dissolved house of representatives, the lower house of parliament, or simply announce the constituent assembly polls."
Opposition parties have said they will boycott next year's elections in the same manner they avoided February's municipal elections which saw a 20% turnout.
The current political crisis began when King Gyanendra dissolved parliament and assumed full control of the government under a state of emergency in February 2005.
He vowed to restore democracy and peace in Nepal, but few in the country are convinced that he can deliver given the national and international isolation he is facing.
Opposition parties and the rebel Maoists consider the nearly 250-year-old monarchy a remnant of a feudalistic order. They blame it for all the social injustices and ills plaguing the impoverished Himalayan nation of 27 million, nearly half of whom live on less than $1 a day.
The king blames the parties for bad governance and rampant corruption.
Opposition, rebels allied
In November 2005, the SPA and the rebel Communist Party of Nepal - Maoist (CPN-M) hammered out a 12-point charter of understanding seeking to bring the rebels into the political mainstream.
This further isolated King Gyanendra, who has been urged by the major international powers to reach out to the political parties for reconciliation.
The opposition and Maoists called
for street protests on April 6
On April 6, CPN-M and SPA stepped up the pressure by calling for street protests and boycotts, marking the most concerted pro-reform effort in the king's 14-month absolute rule.
A large number of SPA supporters, including professors, teachers, journalists, lawyers and doctors, took to the streets of the capital Kathmandu, defying curfews imposed by the monarchy.
This was mimicked in the towns of Pokhara, Nepalgunj, Janakpur, Biratnagar, Bhairahawa, Surkhet and Dhangadi.
Despite a lifting of a daytime curfew in Kathmandu Valley, clashes between protesters and police have continued.
"There's nobody in the streets except the protesters and the police or the army in direct confrontation against each other," Sushil Sharma, a journalist at the scene in Kathmandu, told Aljazeera.net.
A security official in Kathmandu said that the security situation was "volatile" and going from bad to worse.
"I wish the king understood all this and did something to improve our plight," the official said.
Shrish Shumsher Rana, minister for information and communication, blames opposition parties and armed groups for the country's political crisis.
"His Majesty has been inviting the parties including the terrorists (Maoists) for talks for over a year now. But they haven't come forward.
Riot police dismantle road blocks
after the relaxation of curfew
"Now with these protests they are trying to pre-empt his New Year message. All along, they have been trying to fail him. And they are trying to precipitate change," Rana told Aljazeera.net
But analysts say the king may be unaware of the gravity of the country's political crisis.
They say the government's detention of hundreds of political prisoners and crackdown on dissent has exacerbated the situation.
Hari Roka, analyst and columnist for the daily Nepali Times, said: "Now it's high time the king came to terms with the ground reality, or else it will be too late for him.
"It's time he reached out to the political parties for reconciliation; it's time he returned the power back to the people."
Realising that momentum may be on their side, the SPA and the CPN-M say the protests will continue until the king wakes up from his "deep slumber" and reaches out to the political parties.
Girija Prasad Koirala, Nepali Congress leader who also leads the SPA, said: "Now this movement will not stop, it will continue until we make sure that the autocratic monarchy has ceased to exist."
Koirala also hinted that an all-party government with a mandate to bring the Maoists to the negotiating table and subsequently hold constituent assembly elections could end the current turmoil.
"But we will not hold talks with the king on his terms, we will do so on our terms," he said.
Security forces appear reluctant
to fire at protesters
And the signs of change are already there. In the streets of Kathmandu, the civil war- and riot-weary security forces are reluctant to fire at the streams of protesters.
In many places, they just remain silent spectators even as protestors breach the curfew orders and assemble in areas supposedly under curfew.
The CPN's Dev Gautam believes simmering public anger combined with the bloody Maoist revolt has turned the tide.
"It's clear that the king's plan has failed. So the best way forward would be to somehow restore parliament," he said.
"Otherwise the spontaneous people's movement wouldn't stop ... it could end the institution of monarchy itself."