Nepal's Maoists are due to enter the government after signing a peace deal late last year ending a decade-long bloody "people's war", but no date has yet been set.

The embassy said a special licence had been granted to allow the US government to get around rules against providing aid to terrorist organisations. The licence is valid until February 28, 2008.

"This licence enables the US Mission to meet its commitments to continue supporting the people of Nepal and the peace process," said US ambassador James Moriarty in a statement.

The Maoists remain on a US list of terrorist organisations and the ambassador in Kathmandu has frequently said the leftists continue to use intimidation, extortion and violence.

The ambassador stressed that if the Maoists enter the cabinet without abandoning violence, "the US mission will work to ensure that Maoists ministers cannot claim credit for US assistance."

Under the peace deal, the Maoists have agreed to place their weapons and army under UN monitoring and in return have been given 83 seats in a new interim 330-seat parliament.

Aid-dependent Nepal is one of the poorest countries on the planet.

The civil war wrecked an already fragile economy and killed at least 13,000 people.