The Nepal government on Wednesday declared a public holiday to celebrate the signing of a landmark peace agreement between the seven-party alliance and the Maoists, formally bringing to an end the 11-year-old armed conflict.

The government issued a circular that all government offices, schools and colleges will be closed to celebrate the historic peace accord that aims to put an end to the insurgency that claimed 15,000 lives.

Prime Minister Girija Prasad Koirala and Maoist chief Prachanda on Tuesday signed the Comprehensive Peace Agreement to restore permanent peace in the country and build a new Nepal by holding the Constituent Assembly elections.

Under the agreement, the Maoists army will be confined to seven temporary barracks and their arms will be locked under UN supervision. The Nepalese Army will also have to confine their soldiers to barracks and lock up their weapons.

The Nepalese Army will not use their weapons against the Maoists and the Maoists will have to stop extortion, abduction, intimidation, recruitment of new militants and issuing threats. Those who possess arms or use it will be punished under prevailing law.

The government will supply food and other essentials to the combatants once they are in the cantonments. The cabinet has approved Rs 10 crore for this purpose, official sources said.

The two sides also agreed that the king will be stripped of all powers and the royal palace property will be nationalised. Constituent Assembly elections will be held by June 2007 in a free and fair manner.

The two sides will also make public the records of those killed and disappeared in the course of war within 60 days.

The Maoists will be included in the interim government within a two-week period.

On November 7, the Seven Party Alliance and Maoists signed a peace deal to bring the Maoists into political mainstream and to hold constituent assembly elections.