"Unless the monarchy is eliminated, a new Nepal cannot come into existence," Prachanda, or 'the fierce one', said as his flag-waving supporters roared their approval.

The rally, which brought the heart of the city to a standstill, took place on the 11th anniversary of the start of the Maoist revolt that ended last November when the rebels signed a historic peace deal with the government.

"This is a memorable day for us as our 10 years of people's war has been able to establish new norms and values for the country to head towards the path of a republic," he added, in what organisers said was his first public speech here since the early 1980s.

Security was tight as the demonstrators listened to their formerly reclusive leader, who has emerged from a quarter-century underground vigorously to press his cause.

The Maoist leader spoke for just under an hour in a vast open-air theatre and was frequently interrupted by cheering supporters waving red flags and holding banners declaring "Long live the Maoist party," and "Long live Prachanda."

The former rebels entered parliament earlier this year, taking 83 out of 330 seats, but have yet to be given positions in the cabinet.

Prachanda is not a member of parliament. But he said late last year he was willing to serve as president of a future Nepal republic "if the masses want to give me the responsibility and if my party chooses me as the best candidate."

Under last year's peace deal, the fate of the embattled King Gyanendra is to be decided in crucial polls that will elect a body to rewrite Nepal's constitution permanently.

The elections to the constituent assembly are supposed to be held by mid-June.

But on Monday, Ian Martin, the UN envoy to Nepal's peace process, warned the deadline could be missed unless parliamentarians swiftly pass legislation to hold the polls.

"If constituent assembly elections cannot be held by mid-June, we should be ready to declare Nepal a democratic republic by mid-May," Prachanda told the crowd.