KATHMANDU - Nepal's government and Maoist rebels agreed minutes after midnight on Wednesday to put rebel arms under UN watch, a key move to rescue a faltering peace process aimed at ending a conflict that has killed thousands.
"The Nepali people want peace and democracy. This agreement isa significant step in this direction," Prakash Sharan Mahat, a senior leader of the Nepali Congress (Democratic), a member of the ruling seven-party alliance, told Reuters.
"The rebels will be kept in camps where cameras and other mechanisms will be installed to monitor the arms," Mahat said, adding: "An equal number of arms held by the government army will also be locked."
The agreement caps two days of intense talks headed by Prime Minister Girija Prasad Koirala and Maoist chief Prachanda, supported by negotiators from both sides as well as leaders of the ruling alliance.
The pact says that the monarchy would continue in an almost powerless form until a constituent assembly -- which will be elected in 2007 -- takes a final decision on its fate.
Earlier, the Maoists had been demanding the abolition or suspension of the monarchy before the elections to the assembly.
"The first meeting of a constituent assembly will take a decision about the future of monarchy," Mahat said.
The assembly will prepare a new constitution which was a key demand of the Maoists to end their revolt which has left more than 13,000 people dead.
The rebels, fighting since 1996 to topple the monarchy, and the government announced a truce and began negotiations soon after King Gyanendra ceded absolute power following violent street protests in April.
But a dispute over disarming the rebel army had remained a sticking point because the Maoists had refused to lay down their guns before elections to the assembly.
After several lengthy rounds of talks and pressure from the international community, the rebels earlier said they had agreed to keep their 35,000-strong force in temporary camps and lock up their weapons under UN supervision in return for a pledge from the government to keep an equal number of its arms locked up.
