Nepalese guides on Mount Everest have declared they are packing up and leaving the mountain after a meeting at which they decided to abandon this year's climbing season to honour dead colleagues.

Thirteen Sherpas were killed and another three are presumed dead after a devastating avalanche last Friday in the most deadly accident on the world's highest peak.

Sherpa guides had threatened to cancel all climbing on Mount Everest and issued an ultimatum to the Nepalese government, demanding higher compensation, an agreement to revise insurance payments, and a welfare fund.

The government has since agreed to compensation demands, but it remains uncertain whether Sherpas will resume climbing.

On Tuesday local guides said they had decided to abandon the season out of respect for their dead colleagues.

Relatives and friends farewelled one of the dead sherpas, Ankaji Sherpa, in a cremation ceremony in Kathmandu on Monday. ( Reuters: Navesh Chitrakar )

"We had a long meeting this afternoon and we decided to stop our climbing this year to honour our fallen brothers," guide Tulsi Gurung said from Everest base camp.

"All Sherpas are united in this. Some guides have already left and others will take about a week to pack up everything and go," said Mr Tulsi, whose brother is among those missing after the avalanche.

But Ang Tshering Sherpa, president of the Nepal Mountaineering Association, said that although some Sherpas had proposed suspending work for the season, they had now agreed to resume expeditions on Saturday.

Adding to the confusion, an American climber at base camp said the Sherpas had voted to head down and were packing up.

"The ice doctors who set the routes say the current route is too dangerous and there are no alternative routes," said Ed Marzec via email.

Mount Everest: Key facts More than 4,000 climbers have scaled Everest but some 250 mountaineers have died on the mountain

More than 4,000 climbers have scaled Everest but some 250 mountaineers have died on the mountain New Zealand's Sir Edmund Hillary and Nepali climber Tenzing Norgay made the first successful ascent in 1953

New Zealand's Sir Edmund Hillary and Nepali climber Tenzing Norgay made the first successful ascent in 1953 The youngest person to reach the summit is Jordan Romero from the United States, who successfully climbed the mountain in 2010 aged 13

The youngest person to reach the summit is Jordan Romero from the United States, who successfully climbed the mountain in 2010 aged 13 There are two main climbing routes – the South Col and the North Col/Ridge route

There are two main climbing routes – the South Col and the North Col/Ridge route According to Elizabeth Hawley, considered the world's leading authority on Himalayan climbing, the 2014 avalanche is the worst-ever incident on the mountain

According to Elizabeth Hawley, considered the world's leading authority on Himalayan climbing, the 2014 avalanche is the worst-ever incident on the mountain The previous worst incident in 1996, when 11 people were killed in a storm, was immortalised in the best-selling book Into Thin Air

The previous worst incident in 1996, when 11 people were killed in a storm, was immortalised in the best-selling book Into Thin Air Sherpas take huge risks to help foreign climbers up the mountain - they fix ropes, carry tents and food supplies and make repairs

"In addition, the famous Lama Geshe told his people that they should not go to the summit because more will die," he added, referring to the revered Buddhist guru who gives his blessing to Everest climbers.

Another Sherpa guide, Pasang Sherpa, added: "Sixteen people have died on this mountain on the first day of our climb, how can we step on it now?"

Last week's disaster underscored the risks borne by Sherpas who ascend the icy slopes, often before dawn and usually weighed down by tents, ropes, and food for wealthy clients who pay thousands of dollars to climb the mountain.

Sherpas earn between $3,000 and $6,000 a season, but their insurance cover is almost always inadequate when accidents happen.

The government said the minimum insurance cover for Sherpas on Everest would be raised by 50 per cent to about $15,000, and that it would establish a relief fund for the welfare of bereaved families and also pay for the education of their children.

"We will also take steps to prevent such incidents in the future," tourism minister Bhim Acharya said.

Until now there has been no provision for government compensation for Sherpas hired by international expeditions to carry gear, and in the past these groups have provided financial assistance on their own in the case of accidents.

More than 300 people, most of them local guides, have died on Everest since the first ascent by Edmund Hillary and Tenzing Norgay in 1953.

Ankaji Sherpa's mother at the Kathmandu cremation ceremony. ( Reuters: Navesh Chitrakar )

AFP/Reuters