Nepal's government agreed on Sunday to abolish the centuries-old monarchy in a political deal with Maoist former rebels, but the decision only comes into effect after next year's elections, party officials said.
The Himalayan nation plunged into a fresh political turmoil three months ago when the anti-monarchy Maoists, who ended their decade-long civil war last year, quit the government.
They were demanding an immediate declaration of a republic, a step that indefinitely delayed the constituent assembly elections that had been set for November.
Those polls, Nepal's first national vote since 1999, were meant to map the country's political future, including that of the monarchy, and expected to cap the landmark peace deal.
Government leaders met with Maoist chief Prachanda to break the deadlock that has dealt a blow to the 2006 pact ending the conflict which caused more than 13,000 deaths.
"Nepal will be a Federal Democratic Republic nation ... and the decision will be implemented after the first meeting of the constituent assembly," the six-party ruling alliance and the Maoists said in a statement.
"But if the king creates serious hurdles to the constituent assembly elections a two-third majority of the (interim) parliament can remove the monarchy even before the polls," it said.
The popularity of King Gyanendra plunged when he sacked the government and assumed absolute powers in 2005 only to bow down after weeks of protest. The monarch has traditionally being viewed as an incarnation of the Hindu god Vishnu.
A party official on Sunday said the government will move a motion in the interim parliament to amend the provisional constitution to incorporate the agreement.
Leaders also agreed to increase the number of seats in the constituent assembly to 601 from 497. 335 of them will be elected on the basis of proportional representation, 240 on first-past-the-post basis and the rest to be nominated by the cabinet.
The Maoists had previously demanded fully proportional elections.
The twice-delayed elections will now be held within the Nepali year which ends on April 12 and the Maoists will rejoin the government, said Arjun Narsingh KC, a spokesman for the Nepali Congress Party, the country's biggest.
The government will decide the election dates.
Thousands of Maoist former fighters are confined to United Nations-monitored camps since last year after the government agreed for the elections, a key demand of the Maoists during the war which started in 1996.
The government will also begin the process of integrating the Maoist ex-fighters and pay their wages regularly, the statement said.
In return the Maoists will hand back the property and land seized from the people during the conflict.
"All parties must be honest to implement the agreement. Otherwise, it has no meaning," KC said after the meeting.
Mainstream political parties say the Maoists are still extorting money and intimidating political workers.