Nepal’s Maoist rebels are to end their decade-long struggle and join an interim government to be formed within weeks, the rebels’ leader said after meeting with top government officials today.

"This is a historic decision and will move the country in a new direction," the long-elusive rebel leader known as Prachanda told reporters, announcing the agreement between the Maoists and the government.

He announced that an interim government will be created within a month after his unprecedented meeting with Girija Prasad Koirala, the prime minister, and leaders of all seven political parties in the ruling alliance.

The agreement also calls for the creation of an interim constitution, and United Nations oversight of both the Nepalese soldiers and Maoist fighters. It made no mention, however, of disarmament.

A joint statement signed by Prachanda and leaders of the seven-party alliance now running the country said: "We’ve agreed to dissolve the parliament and the Nepal Communist Party Maoist People’s government and on the framing of an interim constitution and the forming of an interim government."

It was also agreed that elections will be held for a body to redraft Nepal’s constitution, which will decide the future of the monarchy.

"A democratic republic is our minimum demand and we will go to the Nepali people with this demand during the constituent assembly elections," Prachanda said following the meeting at the prime minister’s official residence.

It was the first time Prachanda, whose real name is Pushpa Kamal Dahal, met the country’s senior leadership since the insurgency began in 1996. For years, he was seldom seen at all in public, appearing only occasionally in remote villages controlled by the rebels.

The rebels have taken control of a wide swathe of rural Nepal, one of the world’s poorest nations, during their battle to create a communist nation. The years of fighting have left some 13,000 people dead and hit the important tourism industry.

Kapil Shrestha, a political science professor from Nepal’s Tribhuvan University, said the meeting was an historic occasion.

He said: "Now it will be difficult for the Maoists to return to the jungle as they have come too far from their earlier position. This [the meeting] shows that both the government and the Maoists are sincere and serious enough to establish peace in the country."

The rebels and a group of political parties formed a loose coalition earlier this year, mounting strikes and protests before eventually forcing an end to the dictatorship rule of King Gyanendra.

Nepal’s new government took office in April after the King agreed to relinquish his absolute rule.

The new parliament adjourned yesterday until July 2 to focus on an effort to build a peace process with Maoists.

The Maoists have refused to hand over their arms before the elections and want their weapons and those of the state army be placed under the supervision of the United Nations.

Prachanda was accompanied by his second-in-command, Baburam Bhattarai, and Krishna Prasad Sitaula, the Home Minister.

Heavily-armed soldiers and plain-clothed Maoist bodyguards kept back reporters, photographers and hundreds of citizens who gathered outside the gates of prime minister’s residence to catch a glimpse of the elusive rebel leader.

The first round of talks to end the conflict took place last month, when the two sides agreed on a code of conduct.

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