Nepal is in the throes of a political crisis after King Gyanendra sacked the government and declared a state of emergency.
Many of Nepal's former leaders are under house arrest
The monarch placed the prime minister and members of his cabinet under house arrest, accusing them of failing to put an end to a bloody rebel insurgency.
The king said he was assuming control and would appoint his own cabinet.
There has been international condemnation of the move and calls for democracy to be restored to Nepal.
Phone lines have been cut, flights to the capital have been cancelled and Nepal's press has been censored.
Armoured vehicles and security forces took to the streets following the king's televised announcement, but were no longer visible by nightfall.
Nepal's neighbour, India, said the king's action was a setback to Nepalese democracy and a cause for grave concern.
The move would "benefit the forces that not only wish to undermine democracy but the institution of monarchy as well," a foreign ministry spokesman said.
The UK government criticised the development and appealed for "calm and restraint".
Louise Arbour, the United Nations high commissioner for human rights, called on King Gyanendra to "ensure that the democratic institutions of the state are reinstalled without delay".
Armed guards have surrounded the homes of Prime Minister Sher Bahadur Deuba and other senior politicians.
Mr Deuba was quoted by the Associated Press news agency as criticising the king's decision.
"The move directly violates the constitution and is against democracy," the agency cited him as saying from his home.
The leader of one of the main parties in Mr Deuba's coalition, Madhav Nepal of the Communist Party, said the king had staged a coup d'etat.
The BBC's Charles Haviland in the capital, Kathmandu, says the palace summoned newspaper editors to tell them their publications would be vetted from now on.
He says as soon as the king announced he was taking over power, all telephone lines were cut off.
NEPAL IN CRISIS
June 2001 - Gyanendra is crowned king following royal massacre
July 2001 - Sher Bahadur Deuba becomes prime minister following Maoist violence
Oct 2002 - King Gyanendra sacks Deuba and assumes executive power
June 2004 - Deuba reappointed prime minister in place of Surya Bahadur Thapa
Feb 2005 - Deuba sacked, king assumes direct power
Nepalese news websites were inaccessible.
King Gyanendra said a new cabinet would be formed under his leadership, which would "restore peace and effective democracy in this country within the next three years".
Our correspondent says some commentators are saying that by doing this, the king is putting the future and the reputation of the monarchy on the line.
He says many Nepalis will be furious at this complete removal of democratic structures and will fear the consequences of granting more power to the army, which already stands accused of grave human rights abuses.
But, he adds, others may give the king a chance. One shop owner told the BBC that something had to be done in the face of political paralysis and corruption.