Not in a mood to give in to King Gyanendra's gambit, the seven-party alliance spearheading the pro-democracy movement on Saturday rejected his offer of transferring executive power to the people and vowed to continue their agitation.

Complete Coverage: Crisis in the Himalayan kingdom

The decision of the alliance, which met and considered the royal proclamation on Friday announced by the King over a televised national address, came even as thousands of protesters converged on the Kathamandu streets, demanding an end to monarchy.

"We will not accept the King's proclamation. We will continue with our peaceful agitation," Communist Party of Nepal general secretary Madhav Kumar Nepal told a cheering crowd after a meeting of the alliance leaders at the residence of former prime minister Girija Prasad Koirala.

"The king's proclamation has failed to address the objective and agenda of the people's movement. It has devalued people's sentiments," a statement issued after the alliance meeting said.

UN studying King Gyanendra's statement

The parties suspect a design behind the king deciding to go back to the situation prevailing before February one last year when he had sacked the Sher Bahadur Deuba government and vowed to crush the decade-old Maoist insurgency.

Retention by the king of the power to step in at any time under Article 127 of the Constitution, they feel, is an indication that there is no guarantee that the transfer of power is irreversible.  The king had also asked the alliance to name a new prime minister and offered to hold elections as soon as possible.

The meeting was attended by Nepali Congress President Koirala, Madhav Kumar Nepal, Nepali Congress (Democratic) President Deba, Jan Morcha Nepal Chairman Amik Sherchan, Nepal Workers and Peasants Party Chairman Narayanman Bijukchhe, Nepal Sadbhavana Party (A) Vice President Bharat Vimal Yadav and United Left Front leader Bishnu Bahadur Manandhar.

The seven-party alliance saw no no purpose being served by agreeing to the King asking it to recommend a name for the prime minister's post.

Nepal unhappy with King's speech

"There is no point in accepting the call to forming a government that cannot fulfill the people's aspirations effectively at a time when the movement has reached its climax," the alliance statement said.

The decision of the parties comes in the wake of an unprecedented upsurge in public sentiments against the king. Any dilution of their stand could make these parties leading the agitation unpopular.

"We want the King not to misuse Article 127 of the Constitution again and again and it is the aim of the movement to ensure that sovereignty, state authority and power to govern all rests on the Nepali people," said the alliance statement.

The parties pledged to continue the agitation on the basis of the agenda set out in their roadmap in a peaceful and non-violent manner.

Reinstatement of Parliament, forming an all-party government, initiating dialogue with Maoists, and holding constitutent assembly election on the basis of dialogue and understanding are steps set out in the road map by the alliance to resolve the political crisis. It has asked the security forces not to suppress the demonstrators and the people not to be misled by 'infiltrators,' who may attempt to sway them.

In a related development, European Union diplomats met the leaders of political parties and urged them to consider the King's offer.  "The parties feel that King has not done enough, but we think it is a basis on which we can build a move forward," British Ambassador Keith George Bloomfield said after the meeting.

Meanwhile, atleast six people were injured when Nepalese forces opened fire at thousands of protesters who marched in the heart of the capital towards the Royal palace defying curfew orders to demand the end of King Gyanendra's direct rule.

Shouting 'Gyanendra leave the country,' protesters in large numbers defied the curfew re-imposed for an eight-hour period this morning and staged demonstrations.  Shops opened for a brief while but shutters were down at noon.

Police fired at opposition protestors at Thapathali area near central Kathmandu, when they were marching from Baneshwor in the outskirts of the city towards the prime minister's office at Singhdurbar Secretariat.

Demonstrators belonging to the seven-party alliance for restoration of democracy also tried to march towards the Narayanhiti Palace but the Army and armed police stopped them at various points, triggering pitched street battles.

Mobile phones were also not operational in the evening as Kathmandu's streets were filled with crowd despite the imposition of a daytime curfew.

The police fired tear gas shells and a few rounds of bullets at Thapathali injuring half a dozen people, an eyewitness said.

Police resorted to firing at half a dozen places in Kathmandu.

Troops, armed with sophisticated weapons and aided by armoured vehicles, took up position near the Palace and a helicopter hovered in the sky as demonstrators tried to march towards the centre of Kathmandu.

A day after the monarch offered to return political power to the people, demonstrators continued to fill the streets of Nepal, shouting anti-King slogans in various districts.

The people's aspirations were so high with the movement being intensified that the king's proclamation failed to satisfy them, a political analyst said. Hundreds of thousands of people came to street in Chitawan, Pokhara, Jhapa, Biratnagar and other places across Nepal.

Several dozen people were wounded in tear gas firing and baton charging. Many of the injured were admitted to the Kathmandu Model Hospital for treatment.