Tens of thousands of Nepalese have held a victory rally in Kathmandu after King Gyanendra agreed to reinstate parliament, but another large crowd demanded he leave the country.
The mixed reaction comes in the wake of political parties welcoming the king's move, but the Maoist rebels rejecting it.
The seven-party political alliance has ended its three weeks of protest rallies against the king, and has nominated former Nepalese Prime Minister Girija Prasad Koirala to head the country's new government.
In rejecting the king's decision, the Maoist rebels say protests will continue until a new constitution is written by an elected constituent assembly.
Maoist rebel leader Prachanda also criticized the political parties, saying they were making a "mistake" by accepting the king's offer.
Reports from Kathmandu say small groups tried to approach King Gyanendra's palace, but were blocked by riot police.
Some people tore down billboards showing excerpts of the king's speeches, and other protesters called for an end to the monarchy.
The king has called on the seven-party alliance to "bear the responsibility" of leading Nepal down the path of prosperity and assuring peace and democracy.
He also offered condolences for the deaths of 14 demonstrators killed by his security forces. A U.S. State Department spokesman, Adam Ereli, says Washington salutes the courage of the Nepalese people.
The spokesman welcomed the king's pledge to restore democracy and urged him to accept a ceremonial role as monarch.
King Gyanendra fired the government in February last year and seized absolute rule, saying politicians had failed to stop the Maoist insurgency.
Information for this report is provided by AP, AFP and REUTERS.