The king said the emergency was necessary to fight the Maoists

It is not clear what impact the move will have. There is no sign he is restoring multi-party democracy.

There has been a mixed reaction from opposition parties and legal experts.

The king dismissed the government on 1 February, saying it had failed to deal with Nepal's Maoist insurgency in which some 11,000 people have died.

The move provoked international condemnation.

His Majesty in accordance with the constitution has lifted the order of the state of emergency

Statement from royal palace in Kathmandu

Q&A: Nepal crisis

The king also set up a highly controversial anti-corruption commission with sweeping powers that critics say is a tool to muzzle dissent.

One sentence

The lifting of the state of emergency has been welcomed by India which, like the US and Britain, has suspended arms supplies to Nepal.

However Indian Foreign Ministry spokesman Navtej Sarna called for the release of all political leaders still in custody and "the restoration of civil liberties".

Under Nepal's constitution the state of emergency would have expired on Sunday, three months after it came into force.

Street protests have been banned

"With the end of emergency rule, all the fundamental rights should deem to have been restored in theory and practice," newspaper editor Yubaraj Ghimire said, quoted by Reuters news agency.

"But whether they have been restored or not depends on the behaviour of the state. There are still some areas of confusion over the power the king has retained."

A senior member of the Communist Party of Nepal, part of the coalition government sacked by the king, said it was too early to assess the move.

"I can't take the king by his words," Pradip Nepal said.

Mahesh Acharya, of the Nepali Congress Party said the move was not enough.

"There is a lot more the king has to do, like free political leaders and lift all restrictions, before we can say emergency rule has been totally lifted," he said, the Associated Press news agency reports.

Arms embargo

The lifting of the state of emergency came hours after the king returned to the country from a tour of Indonesia, China and Singapore.

India has pushed for the speedy return of democracy in Nepal

There were reports last weekend that the Indian Prime Minister, Manmohan Singh, was considering lifting his country's arms embargo on Nepal.

Since the introduction of the state of emergency, the army has said it has inflicted some heavy defeats on Nepal's Maoist rebels.

Human rights groups have grown increasingly alarmed at developments saying that ordinary citizens have been suffering further human rights abuses at the hands of both the army and the rebels.