Nepal plunged into a political crisis on Tuesday after King Gyanendra sacked the eight month-old Sher Bahadur Deuba government, assumed all executive powers for the next three years and declared a state of emergency in the country.

Armoured vehicles with mounted machine guns patrolled the capital amidst reports that several politicians have been put
under house arrest. All telephone lines, including mobile phone services, were disconnected soon after the royal announcement.

In a brief comment to reporters, 59-year-old Deuba, whose house was surrounded by soldiers, said: "We will oppose this step."

Charging the Deuba government with failing to hold talks with Maoist rebels and conduct parliamentary elections by April, the king in a televised address to the nation said: "I hereby dismiss Deuba government and assume all executive
powers, in line with the Constitution.

"The government has not done anything with seriousness to start the election process within the stipulated time frame," he said announcing Deuba's second dismissal in three years.

The 55-year-old monarch, who assumed the throne in 2001 following the gunning down of his brother king Birendra, declared that a new government would be formed under his leadership that "will restore peace and effective democracy in this country within the next three years."

Later, the state-run TV reported that a state of emergency has been declared in the country.