Nepal's beleaguered King was on Wednesday given 15-day time to vacate the royal palace as thousands of people poured into the streets and sprinkled vermillion on each other to celebrate the country's transition to a republic.

A large number of slogan-shouting people gathered outside the Birendra International Convention Centre, where the newly elected Constituent assembly will be meeting to formally abolish the 240-year-old monarchy.

The meeting scheduled to be held at 11 am has been postponed till 3 pm due to some "technical" difficulties".

According to Nepali Congress general secretary Bimalendra Nidhi, last-minute discussions are going on at the Prime Minister Girija Prasad Koirala's residence at Baluwatar to settle key issues including outlining rights and duties of the President and the procedure to create the post of president through constitutional amendment.

The parties have agreed to give 15-day time to the King to leave the palace, which will then be converted into a national museum, Nidhi said.

Maoist chief Prachanda will be the prime minister of a new coalition government after the motion to declare Nepal republic is endorsed by Assembly.

Rallies are being held by the various political parties across the country with the government declaring a public holiday. People were seen smearing vermillion on each other while young boys and girls inscribed 'Ganatantra Nepal' on theirs faces.

Riot police have been deployed at all sensitive places including aoutside the king's Narayanhiti palace by the jittery government after a spate of blasts left five people injured on Tuesday.