The Government of Nepal today signed a peace deal with Maoist rebels to formally end a decade of civil war that has claimed more than 13,000 lives and crippled the Himalayan nation’s economy.

The Prime Minister, Girija Prasad Koirala, and the Maoist rebel leader, Prachanda, signed the agreement seven months after pro-democracy protests forced King Gyanendra to give up direct rule and the Maoists agreed to a ceasefire.

"The accord puts an end to the long conflict," Krishna Prasad Sitaula, the Interior Minister and chief government negotiator, said after reading the text of the agreement.

Under the terms of the deal, the Maoists will be invited to join an interim parliament later this week and to form part of a new interim government by the beginning of next month. In return, the movement's 35,000 fighters have agreed to lay down their arms and travel to 28 UN-administered camps across the mountainous country. Their weapons will be placed in sealed containers.

The signing of the agreement was postponed last week because the UN monitoring officials were not in place and the Maoists continued to haggle with the Government over how many seats they would be given in the interim parliament.

Whether the peace holds is thought to depend on the next six months, during which the Government has agreed to confine thousands of soldiers to their barracks in the run-up to elections for a consituent assembly next June, which will convene next year to rewrite Nepal's constitution.

The Maoists seek the abolition of Nepal's monarchy, which dates from the 18th century and whose Kings are regarded as incarnations of Vishnu, the Hindu god. Incessant fighting and protests in Kathmandu, which King Gyanendra suppressed violently earlier this year, have weakened the royal family enormously.

C. K. Lal, a political analyst, told Reuters today that the rebels will be watching closely to see if they can achieve their goal through the ballot box rather than fighting. Last week, Prachanda, the rebel leader, reserved the right to return to armed struggle if the Government failed to observe the terms of the deal.

"This will have a meaning only if a majority of the Maoist cadres think that they stand to benefit by it: that is the possibility of the abolition of the monarchy through peaceful means," said Mr Lal. "Otherwise, they can revolt anytime."

The signing of today's deal comes during a turbulent week in Nepali politics. Yesterday, King Gyanendra, who sacked the Government and assumed total control of Nepal in February last year to fight the Maoists, was sternly rebuked by a panel of Nepali MPs appointed to investigate the deaths of up 20 people in pro-democracy protests earlier this year.

The commission called for "a process to formulate a legislature to take action against the King" because Nepali law does not stipulate how to punish a monarch.

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