The panel's findings, unprecedented in the history of Nepal where the king has traditionally been revered as a god, also blamed 201 other politicians, royalist ministers, civil servants, army and police officers for human rights violations, abuse of authority and corruption in the bloody clampdown.
The government says at least 22 people were killed and more than 5,000 wounded in the actions of security forces against protesters who forced the monarch to relinquish absolute power and restore democracy.
The panel said in a statement the number of wounded had exceeded 9,000.
"The government and parliament must make the required laws and punish all members of the then council of ministers including the king," said Harihar Birahi, a member of the panel headed by retired Supreme Court judge Krishna Jung Rayamajhi.
Under the existing constitution, the monarch enjoys special protection and cannot face punishment for his actions.
But Birahi told Reuters the king had violated that same constitution by sacking the government so should no longer enjoy privileges under the charter.
Others blamed by the panel could face charges ranging from abuse of power to the killing of demonstrators, he said.
On Feb. 1 2005, Gyanendra fired the then multi-party government, assumed absolute power, jailed politicians and gagged the media. He said the move was aimed at crushing an anti-monarchy Maoist revolt that has killed at least 13,000 people since 1996.
But more than a year later, weeks of often bloody street protests against the king organised by political parties and supported by the Maoists forced him to hand power back to the political parties.
"No one should interfere with the human rights of the people on any pretext. No one is above the people," said Birahi.
Prime Minister Girija Prasad Koirala, who received a copy of the panel's findings on Monday, has already vowed to implement the recommendations.
The panel, formed in May, interrogated nearly 300 people, but the king failed to reply to its questions on ordering the crackdown.
Maoist rebels plan to sign a comprehensive peace deal with the multi-party government on Tuesday and join a new interim cabinet in the impoverished Himalayan nation by Dec. 1.
That administration is meant to hold special elections in 2007 for an assembly charged with preparing a new constitution and deciding the fate of the monarchy.
The assembly has been a long-running Maoist demand to end their decade-old revolt.

Copyright Reuters, 2006