The world should suspend the sale of weapons to Nepal, the human rights group Amnesty International has urged.
India, UK and US are the main source of military supplies
It says both government forces and Maoist rebels fail to differentiate between combatants and civilians - and says both sides have killed civilians.
The Himalayan kingdom has been in political crisis since February when King Gyanendra dismissed the government and assumed direct control.
There has been an increase in violence in Nepal since the royal takeover.
The Amnesty report says even items of equipment categorised as non-lethal, such as helicopters, have been used in bombing or shooting civilians.
Two of Nepal's three main arms suppliers, the UK and India, had halted assistance after the February royal coup.
Since then, India said it would resume the supply of military assistance that was "already in the pipeline".
Amnesty is urging both the UK and India to maintain the freeze on military assistance and is calling on the third main supplier, the United States, to join them.
"With the conflict poised to escalate, any further military assistance would be highly irresponsible," it said.
"Arms should not be exported as long as there is a clear risk that they might be used to commit serious human rights abuse," Amnesty's Asia Pacific programme director, Purna Sen, told the Reuters news agency.
About 12,000 people have died in Nepal since 1996, when the rebels began their insurgency.
The Maoists want to replace the country's constitutional monarchy with a communist republic.