The police say the children, most of them under 14, had been prevented from contacting outsiders, including their family for over two years, and that in that time they had not even seen daylight.

Some of the children had raw and often infected wounds caused by the machines used for spinning wool.

The owner of the factory has been arrested.

Employment of children under 14 years of age is illegal and anyone found guilty of forcing children to work faces between three and 10 years in prison.

Cruelty charges

Deputy police superintendent Ranjan Koirala said police were tipped off by workers who had escaped the factory in Kathmandu.

Mr Koirala said the factory owner had been arrested and would be charged with cruelty under the child trafficking act.

"We will try to contact the children's families immediately," the Kathmandu Post quoted him as saying.

"But if unable to find the relatives, we will seek help from various non-government organisations working for child welfare".

International pressure

The room in which the children were confined contained only six mattresses and five blankets for 23 children the newspaper said.

A BBC correspondent in Kathmandu says the government has begun to enforce laws combating child labour after international pressure from countries who buy hand-knotted Nepalese carpets.