KATHMANDU - NEPAL'S Maoists aim to form the nation's first post-royal government this week, a party official said, marking a major step on their journey from rebel army to legitimate political power.

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

Maoist spokesman Krishna Bahadur Mahara said that the ultra-leftists were negotiating with allied parties and hoped to form a government within days.

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

Since the Maoists signed up for peace in 2006, Nepal has seen tumultuous change, with the rebels ending their bloody civil war, winning landmark polls and throwing out the monarchy.

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

The newly elected prime minister will formally take up the role on Monday after being sworn in by President Ram Baran Yadav, officials said.

'Preparations are underway for the swearing-in ceremony,' said Ram Hari Aryal, secretary at the President's Office.

The former rebels and their allies are in talks over the distribution of ministerial portfolios, the Maoist official said.

The Maoists have promised to bring about a 'social transformation' of the impoverished nation, along with radical economic reform.

'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 former rebel guerrillas confined to United Nations-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, Nepal is desperate for financial assistance to help it recover from the decade-long civil war that killed at least 13,000 people and devastated the economy.

Despite their left-wing agenda, the Maoists have won a warm welcome from business.

'Prachanda said the new government will be forming economic policies based on suggestions by business people and industrialists,' said 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.'

Maoist spokesman Mahara said the party was capable of dealing with Nepal's problems.

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