The decision follows a request by Chinese authorities to Nepali counterparts during a meeting on Saturday citing threat of border security during the important political development in Beijing,
The border town known as Zhangmu in Tibetan is frequented by many Nepali traders and residents from Sidhupalchowk and Dolakha districts to buy essentials or work.
One-day permits are provided to all Nepali citizens based on their citizenship cards. The new development won't affect movement of those wanting to visit the town using passports.
Khasa is also the point through which Chinese goods are imported to Nepal using the 800-km long Friendship Highway connecting Lhasa, capital of Tibetan Autonomous Region, to Khasa.