The Nepal cabinet will meet today to consider announcing a state of emergency after Maoist rebels killed more than 100 people at the weekend, a minister said.
Leading newspaper
Kantipur
said an order to proclaim a state of emergency and declare the Maoist rebel group terrorists was almost ready.
Government officials said a declaration of emergency would allow the deployment of the Royal Nepal Army against the rebels, battling to overthrow the country's constitutional monarchy, and give security forces powers to stamp out the violence.
The rebels have been waging a five-year campaign to install a communist republic.
A minister told Reuters the state of emergency could be imposed throughout Nepal or be limited to areas racked by the revolt.
In another development, junior minister Mr Deendra Rajraj Kandel told Reuters up to 56 people, mainly Maoist rebels, died in a clash with security forces, bringing the death toll from three days of guerrilla violence to more than 100.
The fighting, in Sallery in Solukhumbhu district in eastern Nepal yesterday, followed the killing of at least 45 people, mainly security forces, during rebel attacks at the weekend on security posts across the country.