The United States has warned Nepal that American aid to the Himalayan kingdom is at risk following King Gyanendra's taking of executive power 10 days ago.
The king sacked the previous government 10 days ago
The US ambassador in Kathmandu said the king should loosen some restrictions in the country within 100 days.
James Moriarty said political detainees should be freed and constitutional freedoms restored.
King Gyanendra sacked the previous government saying it had failed to tackle the Maoist uprising.
'Everything's at risk'
Like Nepal's other close allies, India and Britain, the United States was swift to criticise the royal takeover.
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
At that time it said it was "deeply troubled" by the dismissal of the government and the suspension of rights under a state of emergency.
Washington predicted this would undermine Nepal's struggle against Maoist insurgents.
Mr Moriarty said there was now "pressure" on US assistance to Nepal, which includes civil and military aid.
He said the pressure would increase if liberalisation measures were not taken within 100 days.
"I would hope that much of what we do that saves lives here, for example, giving Vitamin A to three-year-olds so that they won't die before they reach five, will continue, but frankly I think everything's at risk right now," Mr Moriarty said.
He said the monarch should "reach out" to the political parties and outline a game plan to bring back democratic institutions and deal with the insurgency.
The ambassador also revealed that late last year he had told the Nepalese government that a move like this would be counter-productive.
The Indian ambassador here has also reiterated Delhi's criticisms of the royal move.
The Maoists have been urged to return to peace talks
However, the BBC's Charles Haviland in Kathmandu says continued media censorship means most Nepalis are unaware of the international reactions to the takeover.
On Friday, Nepal's new home minister made a direct appeal to the Maoists to enter talks and seize the chance for peace.
He said the government was ready to discuss all issues with the rebels.
"Our first priority is peace, peace talks," he said in an interview with Reuters.
"We have kept our options open, let us first come to the table, we will discuss every aspect, including a constitutional assembly."
He said the moves by the king had fulfilled a key Maoist demand. The rebels had previously refused to talk to political parties, saying they wanted a direct dialogue with the monarch.
The rebels have so far not responded to the new government's overtures for talks but have condemned the takeover.