Nepal's King Gyanendra on Tuesday dismissed the Sher Bahadur Deuba government, appointed last year, and assumed power in the Himalayan Kingdom.

The monarch, in a televised address to the nation, accused the government of failing to restore peace and not taking steps for the conduct of parliamentary elections.

"I have decided to dissolve the government because it has failed to make necessary arrangements to hold elections by April and protect democracy, the sovereignty of the people and life and property," the king said.

"I have exercised the rights given to the crown under the present constitution and dissolved the government for the larger interests of the people, country and protection of sovereignty," he said.

Accusing political parties of 'indulging in factional fighting', the monarch said, "In fact, all the democratic forces and political leaders should have united to protect the country's democracy, national sovereignty, people's life and property and also protect the country's economic infrastructure.

"Innocent children were found massacred and the government could not achieve any important and effective results. The crown traditionally is held responsible for the protection of national sovereignty, democracy and also people's right to live peacefully.

"It is the duty of the crown to protect all these segments of society," he said.

King Gyanendra said a new cabinet would be formed under his leadership. "This will restore peace and effective democracy in this country within the next three years," the king said.

Security forces and plainclothesmen were seen stationed at government offices and at residences of several political leaders.

King Gyanendra had appointed Deuba as Prime minister last year and asked him to conduct parliamentary elections and hold peace talks with the Maoist rebels.

Earlier, the king had sacked Deuba in 2002 for failing to hold elections, but asked him to form the government last year as the rebels stepped up insurgency in the Himalayan kingdom.