Members of the new cabinet arrived at the royal palace in black official cars for the brief oath-of-office ceremony that followed Gyanendra's dismissal of Prime Minister Shah Bahadur Deuba and his government yesterday.

Gyanendra said the sacking of the ruling coalition was necessary to crush an increasingly bloody Maoist revolt.

The new cabinet was mainly made up of pro-monarchists, including foreign minister Ramesh Nath Pandey, finance minister Madhukar Shumsher Rana and Dan Bahadur Shahi as home minister.

Security was tight on the streets of Kathmandu which were jammed as usual with traffic, while shops and businesses and schools were open.

But land and mobile phone networks and Internet links were still not working after being shut down yesterday. The international airport was functioning.

Gyanendra, vaulted to the throne four years ago by a palace massacre that wiped out most of the royal family, said he fired the multi-party government for failing to hold elections and bring peace to the country. He pledged to "restore democracy and law and order in the country in the next three years."

Security forces in the scenic mountain kingdom known as the Land of Everest have been battling for nine years to stamp out the revolt by Maoists seeking to topple the monarchy and install a communist republic.

The conflict has claimed over 11,000 lives.

Newspapers, operating under new state of emergency rules suspending press freedom, used neutral language to announce the news.

"His Majesty Dissolves Deuba government," said the state-run Rising Nepal. "Deuba cabinet dismissed, king takes charge," said the Himalaya Times, a leading privately owned newspaper.

Witnesses in the capital saw only one demonstration under new laws banning free assembly. It was by several hundred pro-royalists near the palace, who shouted: "Long Live the king, peace will now prevail."

Opposition leaders were out of sight and believed to be under house arrest.

Witnesses said security men dragged away G.P. Koirala, leader of the Nepali Congress, and Madhav Kumar Nepal, head of the Nepal Communist Party-United Marxist and Leninist Party, yesterday when they emerged from their homes to try to speak to reporters.

"People are trying secretly to organise meetings but some of the senior leaders have been arrested so they have not been able to. There are army watchdogs at the gates (of the campus). They're asking for information and checking ID," said a 20-year-old student at Kathmandu's Tribhuvan University.

A Supreme Court lawyer, Mitilesh Kumar Singh, called the king's move a "political tsunami. He wants to bring about peace and security ... a good thing but I doubt he'll be successful and it's a violation of the constitution."

The king's dismissal of the ruling coalition was condemned by the United States, United Nations, Britain and India as a setback for democracy.

UN Secretary General Kofi Annan led demands for an immediate restoration of democracy in Nepal.

Annan "is deeply concerned" over the king's actions, which are a serious setback for the country, UN spokesman Fred Eckhard said.

"Steps should be taken immediately to restore democratic freedoms and institutions," Eckhard said, noting that Annan had called for "calm and restraint by all parties in the country, so as to avoid actions that could worsen the situation."

Rights groups Amnesty International and Human Rights Watch as well as the International Commission of Jurists in a joint statement expressed fear for the immediate safety of human rights campaigners, political activists and members of the National Human Rights Commission, who have recently faced increasing harassment from both security forces and the Maoist rebels.

The groups are concerned that the steps being taken by the king and his army "have been sweeping, arbitrary and excessive."

The United States, which provides Nepal's army with badly needed weapons and training in its fight against the Maoist guerrillas, said it was "deeply troubled" by the apparent step back from democracy.

State Department spokesman Richard Boucher told reporters in Washington that the United States demanded an "immediate move toward the restoration of multiparty democratic institutions under a constitutional monarchy."

Boucher said that in addition to undercutting democratic institutions, King Gyanendra's actions "undermine the Nepalis' struggle with the Maoist insurgency, which is a very serious challenge to a peaceful and prosperous future for Nepal."

In London, Foreign Office Minister Douglas Alexander summoned the Nepalese ambassador Prabal Rana to convey the British government's "grave concerns" over the king's actions.