Kathmandu: Nepalese Prime Minister Lokendra Bahadur Chand on May 30 resigned amidst joint agitation by major political parties demanding formation of an all-party government.

"Prime Minister Lokendra Bahadur Chand has tendered his resignation to His Majesty King Gyanendra and the King has accepted his resignation," a Palace statement said.

It said the King has already started consultations for the formation of a new council of ministers.

Chand's resignation has come at a time when major political parties are agitating against the royal takeover and demanding formation of an all-party government with full executive power to rectify the Constitutional error.

The King, meanwhile, has asked Chand to continue as the caretaker Prime Minister till a new governemnt is formed.

Chand was appointed Prime Minister by King Gyayendra on October 2002, a week after he dismissed the elected government led by Sher Bahadur Deuba of the Nepali Congress.

The King on October 4 removed Deuba through a royal proclamation declaring him incompetent after he recommended to the King to postpone general elections on security grounds.

Deuba dissolved the House of Representatives on May 22, 2002 following differences with Nepali Congress president Girija Prasad Koirala regarding the extention of emergency rule.

The five major parties have been agitating against the October's royal proclamation and have called it a regressive step.

The Premier's resignation comes after the two-day meeting of the former MPs convened by the agitating parties to challenge the legitimacy of the government.

PTI