Faced with mounting pressure from India and other countries, Nepal's King Gyanendra has lifted a state of emergency imposed after the February 1 power grab.
Gyanendra had assured Prime Minister Dr Manmohan Singh in Jakarta last week on the sidelines of the Afro-Asian summit that he would initiate steps for early restoration of multi-party democracy in the Himalayan Kingdom.
The re-arrest of former prime minister Sher Bahadur Deuba earlier this week had resulted in a sharp reaction from India, which said such moves were "contrary" to the assurances given by the Nepalese King.
New Delhi has also maintained that the question of resumption of arms supply to Nepal suspended on February 1 in the
wake of the sacking of Deuba government, declaration of emergency, detention of political leaders and clamping of press censureship, was under "constant review."
The move came hours after Gyanendra returned from a visit to China, Indonesia and Singapore, where he was firmly told to restore democracy in the Himalayan Kingdom.
"His Majesty, in accordance with the constitution, has lifted the order of the state of emergency," a brief palace statement said without elaborating.