KATHMANDU - NEPAL'S Maoists aim to form the nation's first post-royal government this week, a party official said, marking another big step on their journey from rag-tag rebel army to potent political force.

The talks on government formation come after ex-guerrilla chief Prachanda - whose name means 'the fierce one' - was overwhelmingly elected prime minister by the country's lawmakers on Friday.

The ultra-leftists are in talks 'with the parties in our alliance and hope to form a government in the next few days,' Maoist spokesman Krishna Bahadur Mahara told AFP late on Saturday.

'There's an immediate need to bring all parties to a common consensus to take the country forward,' he said.

Since the Maoists signed up for peace in 2006, Nepal has seen tumultuous change, with the ex-rebels ending their bloody civil war, winning landmark polls and consigning an unpopular monarch and his 240-year-old dynasty to history.

The Maoists struck an alliance with two of Nepal's biggest four parties to ensure the election to premier of Mr Prachanda, a former school teacher whose real name is Pushpa Kamal Dahal.

Now the former rebels and their allies from the centre-left Unified Marxist-Leninist party and the Madheshi Janaadhikar Forum are in negotiations over the distribution of ministerial portfolios, the Maoist official said.

The Maoists have promised to bring about a 'social transformation' of the impoverished nation sandwiched between India and China, along with 'revolutionary economic reforms.'

'We have already finished destroying the roots of feudalism in Nepal,' said the Maoists' second-in-command Baburam Bhattarai late last week.

'Under Prachanda's leadership, the main agenda of the new administration will be nationalism, republicanism, economic and social transformation,' he said, comparing the Maoist chief to Lenin and Napoleon.

But the party will be heading a government that faces massive challenges.

The fate of 19,000 ex-rebel guerrillas confined to UN-monitored camps must be decided and spiralling food and fuel prices are putting millions at risk of hunger.

Law and order has deteriorated across the country, particularly in the southern Terai region, where violent unrest has been simmering for two years.

In addition, massive economic assistance is needed to help Nepal recover from the decade-long civil war that killed at least 13,000 people and devastated an already fragile economy.

The Maoists have won a warm welcome from business despite their left-wing agenda.

'Chairman Prachanda said the new government will be forming economic policies based on suggestions by business people and industrialists,' said Mr Kush Kumar Joshi, president of the Nepalese Chamber of Commerce and Industry.

'He also said there would be no curtailing of profits and that the party is eager to work with the private sector,' Mr Joshi said.

Maoist spokesman Mahara said the party was aware it faced tough tasks but was capable of implementing the radical changes it promised voters.

'We've lots of challenges ahead of us but we also have a whole new spirit to confront them,' Mr Mahara said. -- AFP