An interim government will be formed by the beginning of December, negotiators said in the early hours of on Wednesday morning, after a breakthrough in the country's six-month-old peace process.
A government negotiator told reporters that the deal "has opened the doors to build a new Nepal."
"The seven parties and Maoists have reached a historic deal to end the 10-year-old insurgency peacefully," Ram Chandra Poudel, a government negotiator, told reporters outside the talks venue, after a marathon 16-hour session.
The rebel Maoists shared Poudel's assessment of the breakthrough.
"Our party sees this as a historic agreement. With this agreement Nepal has entered into a new era," Ananta, the deputy commander of the Maoist People's Liberation Army told AFP by telephone.
"The current parliament and National Assembly will be dissolved and an interim parliament will be formed by November 26. The interim government including the Maoists will be formed by December 1," Hridayesh Tripathi, minister of commerce, told AFP.
The new government will contain 330 seats, with the Nepali Congress party, Nepal's largest, being given 75 seats. Seventy-three seats will be given to both the Communist Party of Nepal (Unified Marxist-Leninist), the country's second largest party, and the rebels, Home Minister Krishna Prasad Sitaula told journalists.
The rest of the seats would be divided between the five other parties in the ruling multi-party government.
The rebel army would be contained in camps under UN supervision before the end of November, the home minister said.
"The weapons of the Maoists will be locked up and a similar amount of Nepal Army weapons will also be locked up," Sitaula told journalists.
The rebels already control large swathes of the countryside, and the parallel government structures they have established will be dissolved, the home minister said.
"Once the interim constitution comes into effect (on November 26) the
parallel government run by the Maoists will come to an end," the home minister said.
The fate of the monarchy will be decided at the first meeting after elections to a body that will rewrite Nepal's constitution permanently, said Ram Chandra Poudel, a negotiator from the Nepali Congress party.
The breakthrough came after the marathon session of negotiations between Maoists and political leaders that began on Tuesday morning.
Negotiators had expected such a breakthrough this week in Nepal's protracted peace process after the Maoists agreed at the weekend to lock up their weapons and place them under United Nations supervision.
The disarming of the rebels had been a sticking point in the peace process aimed at ending a bloody conflict that has claimed at least 12,500 lives in Nepal since 1996.
The multi-party government came to power in April after mass protests forced King Gyanendra to end direct rule.
Since declaring a cease-fire in May, the government and rebels have held two rounds of high-level peace talks.
In June, the government and the Maoists agreed to hold elections to a constituent assembly to rewrite the country's basic law, meeting a key rebel demand.
The two sides also agreed five months ago to form an interim parliament that would bring the Maoists into the country's political mainstream.
This is the third time the two sides have tried to hammer out a peace deal. Two previous attempts, in 2001 and in 2003, both failed, plunging the country back into conflict.

Copyright AFP (Agence France-Presse), 2006