"When King Gyanendra constituted the present government under my prime ministership, we were given the mandate to hold elections peacefully after holding talks with the Maoists," Prime Minister Sher Bahadur Deuba said.

But Deuba told reporters the government's patience with the rebels was running out and unless they agreed to peace talks by January 13, the process for holding elections would be set in motion.

Nepal has been without a parliament since November 2002 when Gyandendra dismissed Deuba as prime minister, branding him incompetent for failing to hold planned elections.

Deuba, who was reappointed prime minister by the king in June, had said in 2002 the deadly insurgency made it impossible to stage elections for the 205-member House of Representatives.

The rebels have been fighting to topple the monarchy and install a communist republic since 1996 in the impoverished kingdom sandwiched between China and India.

They have spurned repeated government offers for talks to end the conflict which has claimed more than 10,000 lives.

Since his reappointment as premier, Deuba has said repeatedly he would begin the election process even if the rebels failed to come to the negotiation table but this is the first time he has set a deadline.

The Maoists want elections for a new constituent assembly to redraft the constitution that ultimately would be aimed at establishing a communist state.

The Maoists have refused to talk to Deuba and say they only want to meet King Gyanendra who has declined to speak to the rebels.

Deuba renewed Thursday the government's offer to "hold discussions on any subject that the Maoists have been raising and to solve the problem on the basis of national consensus."

He added the government would provide full security for Maoist participants in talks.

The Maoists have threatened to sabotage any polls that are not held to elect a constituent assembly.

Deuba set no date for elections. The king had earlier told Deuba's government to start preparations for elections by mid-May.

The last peace talks collapsed in August 2003 over the rebels' demand for a constituent assembly, leading to an upsurge in violence.

Nepal's army said yesterday it had found the bodies of 25 Maoist rebels after a weekend battle in the country's remote far west.

But it added according to witness accounts as many as 300 more militants may have been killed or hurt in the raid by troops on a guerrilla camp.

The Maoists often carry away their injured or dead comrades on their backs from the battle sites.