Headed by 84-year-old Nepali Congress leader Girija Prasad Koirala, the new government is expected to include leaders of six other parties of the opposition coalition instrumental in ending King Gyanendra's absolute rule this week.

The Communist Party of Nepal-Unified Marxist Leninist (UML), the second-largest party in parliament after the Nepali Congress, has announced it would join the government. So has the Nepal Sadbhavana Party (Anandi), another party of the opposition Seven Party Alliance (SPA).

Forming the new government would be an acid test for Prime Minister Koirala given the history of coalition governments frequently falling out due to infighting over power.

The Nepali Congress won the general election in 1999 and formed the government. But parliament was dissolved in May 2002 and four months later. King Gyanendra sacked the then prime minister Sher Bahadur Deuba and began controlling the government.

Since then, led by Koirala, the Nepali Congress had been vigorously opposing the king's rule. However, the UML joined the royalist government in 2003.

During Koirala's government in 1999, the Maoist insurgency escalated with the palace reportedly encouraging them to curb the Nepali Congress. Though three governments began peace talks with the rebels, there was no headway due to the guerrillas demanding a new constitution that would turn Nepal into a republic.

Now that Koirala's new government too has pledged it would hold elections for a new constitution, there is hope the stalled peace talks would finally make headway.

However, political analysts caution that Gyanendra is not likely to accept a new constitution that might abolish monarchy and turn Nepal into a republic.

Given the king's actions since 2002, he is expected to try to divide the parties yet again and incite the army to attack the Maoists, who have called a ceasefire.

In 2003, peace talks broke down after the then royalist government refused to consider a new constitution and the army killed at least 19 people, said to have been Maoists, extra judicially.