All major political leaders, including Nepali Congress president Girija Prasad Koirala and NCP-UML leader Madhav Kumar Nepal were either under house arrest or detained, sources in the parties said.
Kathmandu was cut off from the rest of the world as communication lines, including mobile, Internet, long distance calls remained suspended for the second day.
The king suspended several provisions of the Constitution, including freedom of the press, speech and expression, peaceful assembly, the right to privacy, and the right against preventive detention, a statement from the royal palace said.
Foreign news channels were taken off the cable networks and local media barred from publishing news or commentary without prior government approval.
The situation in Kathmandu remains calm and quiet till now, but uncertainty and confusion prevails everywhere.
The king, who will head the government through a royal promulgation, named Ramesh Pandey as the new Foreign Minister and Dan Bahadur Shahi as the Home Minister, state-run Radio Nepal said.
Veteran economist Madhukar Shumsher Rana has been appointed as Finance Minister while Tanka Dhaka will be the Information and Communication Minister and Radha Krishna Mainali the minister for sports and education, it said.