The interim cabinet announced an indefinite ceasefire on Wednesday and removed the terrorist tag from the Maoists to try to kickstart talks and bring peace to the impoverished Himalayan nation.

The Maoists, who called their own three-month ceasefire last week, agreed on Thursday to discussions on ending the revolt in which more than 12,500 people have died.

It is the third time that the government and rebels have called a ceasefire at the same time and tried to start peace talks, but on previous occasions negotiations broke down and the country was plunged back into conflict.

Dialogue process

Prachanda, the rebel chief whose name means "the fierce one", said: "We are entering into a dialogue process, feeling deep responsibility for people's aspirations towards democracy and peace.
 

King Gyanendra backed down in
the face of mass protests

"We hope that the peace talks will not fail this time."

Gopal Man Shrestha, a cabinet minister, said earlier that once talks started, the government would release rebel leaders from jails across the country.

Thousands of Maoists have been detained during the insurgency and the interior ministry said up to 700 Maoists, of all ranks, were currently being held.

The Royal Nepalese Army website details 53 people on its "most wanted" list of Maoists, headed by Prachanda.

Protests

Once deadly foes, the political parties and the Maoists late  last year brokered a loose alliance against King Gyanendra to  challenge his absolute rule proclaimed in February 2005. They brought hundreds of thousands of people onto the streets.

The monarch, the constitutional head of the army, backed down in the face of the mass protests, which left at least 17 people dead. He recalled parliament last week after a four-year break.

"We are entering into a dialogue process, feeling deep  responsibility for people's aspirations towards democracy and  peace"

Prachanda,
Maoist chief

The politicians backed plans to call elections to a body to rewrite the constitution and limit the powers of the king - a key demand of the Maoists who began their "people's war" in 1996 to overthrow the monarchy.
 
Before the government's ceasefire call, Prachanda on Wednesday ruled out disarming his forces and launched a verbal attack on the nation's new political leadership in comments posted on the organisation's website.

Prachanda said it would be suicidal for his fighters to disarm while armed forces remained ready for action.

"If anybody is thinking of disarming the Maoists while keeping  the royal army as it is, then they are having a suicidal dream," the article said.

Army duties

The army and the defence ministry said they were awaiting formal notice of the ceasefire call.

"As both the parties have called a situation of ceasefire, there's not any offensive activity from any side," said Bishnu Dutta Uprety, the senior civil servant in the defence ministry.

He said forces would remain on duty to protect "property and life" but no offensive operations had been planned.

Constant battles between the rural-based Maoists and the  security forces have resulted in a stalemate although Gyanendra had said he would crush the rebellion after he sacked the government.

Analysts say the Maoists do not have the ability to take the towns and cities while the under-equipped army cannot defeat the rebels in their often mountainous rural strongholds.