India and Nepal on Monday discussed the status of ongoing peace talks in the Himalayan country, as efforts continued there to evolve an understanding on the crucial arms management issue between the government and Maoist rebels.

The issue was deliberated upon when visiting Nepalese Deputy Prime Minister K P Sharma Oli met External Affairs Minister Pranab Mukherjee.

Oli 'briefed me about the latest situation with regard to the peace negotiations between the political parties and the Communist Party of Nepal (Maoist)', Mukherjee told reporters after the hour-long meeting.

He refused to spell out when asked whether the issue of arms management came up for discussion.

Sources, however, said the matter was discussed, considering that Nepal Prime Minister G P Koirala is going to hold a meeting with Maoist chief Prachanda on it.

Koirala and Prachanda met on Sunday at Baluwatar in the presence of  Ian Martin, United Nations Secretary General's special representative to Nepal.

During the meeting, they sorted out most of the issues related to arms management and agreed to hold fresh rounds of talks on Monday.

The last time the ruling seven-party alliance and Maoists met was on October 15, but they failed to reach an agreement on crucial issues.

Mukherjee said the entire gamut of bilateral relations, including economic and commercial cooperation, was reviewed during the the meeting with Oli, who also holds the portfolio of Foreign Affairs.

The review covered the status of implementation of the economic assistance package announced by India for Nepal during Koirala's visit here in June.

"We attach the highest priority to our relations with Nepal. The Foreign Minister's visit will certainly contribute to further strengthening of our relations," Mukherjee said. Oli also met Prime Minister Manmohan Singh [Images].