"The ceasefire will be extended, possibly for another three months, as we are confident of a peaceful solution with the government," Krishna Bahadur Mahara, Maoist spokesman told AFP on Sunday.
The new government and rebels have observed a truce since late April after mass street protests forced King Gyanendra to end 14 months of direct rule and reinstate parliament.
Both sides have been engaged in talks to strike a deal to bring the insurgents into the government and end a revolt that has claimed more than 12,500 lives since 1996.
But negotiations between the government and rebels last weekend failed to yield results because of differences over the role of monarchy, the status of rebel weapons and troops and the outline of a temporary constitution to allow the rebels to join an interim government.
The co-ordinator of the rebel talks team, however, expressed confidence that the fledgling peace process in the Himalayan nation would make headway "very soon".
On Sunday, Maoist rebel chief Prachanda met with Prime Minister Girija Prasad Koirala to forge an understanding on the issues ahead of the next round of peace talks. A date has not been set for the next set of talks.
"The meeting between the two leaders was very positive and encouraging. We are very near to reaching a consensus," Mahara said.
The two sides have already agreed to hold elections by mid-2007 for a body that will rewrite the constitution and decide whether the monarchy can stay.
But they remain at odds over what to do with rebel weapons.
The Maoists want to keep their 35,000-strong People's Liberation Army and weapons in camps supervised by the United Nations, but the multi-party government wants them to disarm.
The rebels, who control large swathes of Nepal's countryside, want to see Nepal's 90,000-strong army confined to barracks before elections.
This is the third time the two sides have tried to hammer out a peace deal to end the insurgency. The previous attempts ended in a return to fighting.

Copyright AFP (Agence France-Presse), 2006