King Gyanendra, who bowed to street protests last week and handed power back to political parties, appointed the cabinet on the recommendation of Girija Prasad Koirala, the prime minister, on Tuesday, a statement from the palace said.

"We believe this council of ministers will receive the co-operation of all in the discharge of its duty for the welfare and prosperity of Nepal and the Nepali people," the king said.

Vying for power

The cabinet formation was delayed amid reports in the local media that members of a seven-party alliance jostled for positions.

Maoists welcome a vote to
choose an assembly

Ram Sharan Mahat, a liberal economist, was named finance minister, and Khadga Prasad Oli was appointed deputy prime minister in charge of foreign affairs.

Koirala, who was sworn in on Sunday, kept the post of defence and more than a dozen ministries to himself.

Tuesday's announcement came two days after Nepal's parliament unanimously approved a proposal by Koirala to hold elections for a special assembly to write a new constitution to decide the future of the monarchy.

No date has been fixed for the vote.

Difficult tasks

The cabinet, which is interim, faces the difficult tasks of holding talks with the Maoist rebels, winning their backing for the election to the assembly, and reversing laws introduced by the king to maintain his power.

The king appointed Koirala as prime minister last week on the recommendation of the seven parties that launched weeks of anti-king protests in which at least 15 people were killed and thousands wounded.

Koirala has called for talks to
bring peace to the country

The Maoists, who have been pressing for the assembly, have not reacted to parliament's proposal for the vote. But one rebel leader called it positive.

Sunil, a rebel leader, said: "But it is not complete. There can be a conspiracy against the people."

Koirala has invited the rebels, who control large areas of the countryside, for peace talks.

Political parties are under pressure to abolish the monarchy and turn Nepal into a republic. That is also a demand of the Maoists to end their decade-old insurgency in which more than 13,000 people have been killed.