Nepal's Maoist rebels and central government declared a public holiday and a 'new era' for the impoverished nation on Wednesday after signing a landmark peace deal that ends more than a decade of civil war.
Prime Minister Girija Prasad Koirala and Maoist leader Prachanda signed the accord late Tuesday, formally bringing the rebels into the political mainstream.
"This moment marks the end of the 238-year-old feudal system, and it also marks the end of 11 years of civil war," declared Prachanda.
Koirala said the Himalayan kingdom, one of the ten poorest countries on earth, had "entered into a new era".
King Gyanendra welcomed the peace deal, despite many seeing it as heralding the end of the monarchy.
"His Majesty appreciates the contributions of all those involved in bringing an end to the bloodshed, violence and terrorism through the peace accord and hopes that, by ensuring sustainable peace, a prosperous Nepal can now be built with the collective efforts of all Nepalese people through multiparty democracy," a statement issued on Wednesday by the Royal Press Secretariat said.
The fiercely anti-royal Maoists have vowed to continue to battle -- albeit peacefully -- to consign the monarchy to history.
Some of the parties in the coalition, however, favour a ceremonial role for the king -- still revered by many as a Hindu deity. His future is set to be decided after polls next year for a body that will rewrite the constitution.
Kanak Mani Dixit, the managing editor of the respected Himal South Asia monthly, said Gyanendra was now completely sidelined.
"He is a non-entity now. He is the most humiliated man in Asia," said Dixit.
To celebrate the peace deal, government workers were told to take the day off, an elated Home Minister Krishna Prasad Sitaula told AFP.
Around 2,000 rebel sympathisers and political party activists celebrated in a park in central Kathmandu Wednesday afternoon, where musicians played Nepali folk songs as the crowd chanted "long live the democratic republic of Nepal", and "down with monarchy".
"I have come here to thank the leaders of the eight parties (seven parties in the coalition government and the rebels) for making this possible," said Ajamgar Kangmang, the secretary general of the youth wing of the Communist Party of Nepal (Unified Marxist-Leninist).
Under the deal the rebels -- who still feature on the US list of foreign terror groups -- are to end their "people's war" aimed at overthrowing the monarchy by force, join an interim government and enter parliament.
They must also place their arms and troops under United Nations monitoring, and face increased scrutiny of their activities -- which critics say include the forced recruitment of child soldiers, extortion and political assassinations.
"I hope that we will quickly be able to reach tripartite agreement on the full modalities for the management of arms and armies," said Ian Martin, the personal representative of UN chief Kofi Annan in Nepal.
Kapil Shrestha, a politics professor at Tribhuvan University, said now the focus was on whether the two sides could put in the hard work to implement the deal.
"The rebels are now part of the political mainstream and there is no doubt that this is a milestone. Nevertheless, the peace in Nepal totally depends on how the two sides implement the agreement," Shrestha said.
Once foes, the multi-party government and rebels have observed a cease-fire for more than six months after they joined forces in April to organise mass protests that forced King Gyanendra to end 14 months of dictatorial rule.
On Wednesday, tea stall owner Uma Rijal looked happy that the war was finished.
"Finally the war is over, which has been long awaited by people. The peace agreement has given people a reason to smile. Now there won't be any more killings," Rijal said as traffic clogged the street next to her stall in the capital.