"Talks between the leaders of the eight parties are ongoing, but we have not yet reached a conclusion," Deputy Prime Minister Amik Shrchan told AFP.

The unveiling of a new cabinet would be a major step forward for the impoverished Himalayan nation's peace drive, which is aimed at bringing the Maoists into mainstream politics after their deadly, decade-long insurgency.

"There's a high possibility of the formation of the interim government by this evening," Finance Minister Ram Sharan Mahat said ahead of the meeting.

The announcement of a new cabinet has been expected for several weeks, but officials said the seven parties in central government and the Maoists had yet to reach full agreement on who should hold key portfolios.

Media reports also said the stumbling blocks included a decision on whether to have one or three deputy prime ministers. Prime Minister Girija Prasad Koirala has proposed three to keep all sides happy, the Maoists said.

"The eight parties are yet to sort out differences on the ministerial portfolios but today's (Friday's) meeting is expected to lead to a consensus on these issues," Mahat said.

The Maoists joining the government "is a step forward in mainstreaming the Maoists, and bringing them into the constitutional process," he added.

The Maoists and seven-party government signed a peace deal in November 2006. The former rebels, who pledged to end violence and register their army with the United Nations, have already been given seats in a new parliament.

Leaders from the seven parties in government and the Maoists arrived at the prime minister's residence Friday to hammer out the final details of the new cabinet's structure.

"The meeting... is expected to finalise the agreement on the structure of the interim government, which is likely to be formed today (Friday)," Maoist spokesman Krishna Bahadur Mahara said.