Nepal's three main parties held talks on Sunday to try to hammer out a new coalition government after the prime minister agreed to resign to avert a political crisis.
Madhav Kumar Nepal he would step down in a last-minute bid to secure the support of Maoist lawmakers for a bill to extend parliament's term, which was due to end Friday and leave the country without a functioning legislature.
"Leaders of the Nepali Congress, Communist Party of Nepal (UML) and the Maoists are in deep discussions on how to take Friday's agreement forward," UML leader Pradeep Gyawali told AFP.
"They are also discussing the PM's resignation and they hope to create a workplan on the next possible steps."
The opposition Maoists won 2008 elections, but their government fell last year in a disagreement over the integration of their former fighters into the national army, and they have been agitating for a return to power ever since.
As the largest party in parliament they are likely to take a lead role in any power-sharing government, but the prime minister's spokesman said there were issues to be addressed before this could happen.
"The prime minister is ready to resign, there is no doubt," spokesman Bishnu Rijal told AFP.
"He is not going to get in the way, but he wants to make sure that all the outstanding issues arising from the peace process are settled before he resigns."
These include the integration of thousands of former Maoist fighters into the national army and the disbanding of the party's armed youth wing, the Young Communist League, which rival parties say is an obstacle to lasting peace.
The Maoists fought a decade-long civil war against the state before agreeing to lay down their arms in a 2006 peace agreement. But four years later, many of the terms of that deal remain unfulfilled.