Tens of thousands of people are back on the streets in Nepal's capital for a second day of mass protests, despite a shoot-on-sight curfew.
The protesters are demanding an end to absolute rule
King Gyanendra is addressing the nation on the 16th day of protests against his direct rule.
The address comes after protests turned violent in one area of Kathmandu where police killed three people on Thursday.
US ambassador James Moriarty warned the king could be forced from power within days unless he compromises.
Mr Moriarty said: "Ultimately the king will have to leave if he doesn't compromise. And by 'ultimately' I mean sooner rather than later."
King Gyanendra sacked the government and assumed direct powers in February 2005, ostensibly to quell the long-running insurgency by Maoist rebels.
The renewed curfew began at 0900 (0315 GMT) and is not due to be lifted until 2000 (1415 GMT).
Tyres were burning at some places before the curfew was imposed.
By afternoon tens of thousands of protesters had assembled at several points on the edge of the curfew zone on Friday, after as many as 100,000 people rallied in the capital on Thursday.
'Blood of the martyrs!'
Again, barrages of security forces are guarding the curfew zone.
But the BBC's Nick Bryant at Kalanki, where police opened fire on Thursday, reports that security forces have been overwhelmed by the size of Friday's crowd.
Policemen have been outnumbered by protestors
A section of the crowd became angry on hearing that one of those killed in police firing on Thursday had been cremated without his family present.
Members of the crowd have painted "Martyrs' square, long live the martyrs" on the pavement, Associated Press reported.
Protesters chanted "Long live democracy! The blood of the martyrs will not go to waste."
Other smaller demonstrations have been seen inside the curfew area, where curbs were reimposed after six hours of free movement overnight.
India's envoy to Nepal, Karan Singh, who met with King Gyanendra on Thursday, has said that he is optimistic that the monarch will make an "important" announcement later on Friday to resolve the crisis.
Indian diplomatic sources said he had conveyed Delhi's view to the monarch that he should urgently restore multi-party democracy.
Meanwhile, two senior opposition leaders involved in negotiations with the Maoist rebels were arrested as they tried to return to Kathmandu, the Associated Press news agency reported.
The authorities took the body of Basu Ghimire, one of the protesters killed, to a cremation ground on the banks of the Bagmati river in Kathmandu earlier on Friday.
Police in full riot gear stood on the cremation bank while Mr Ghimire's colleagues from the Nepali Congress Party held a minute's silence and then chanted pro-democracy slogans on the other side of the river.
Mr Ghimire's brother-in-law was the only family member present.
He said that police had taken the body to the cremation site without the family's permission and violated a holy site by not letting a family member light the funeral pyre.
Geeta Shahi, one of those present at the cremation, described the haste with which the funeral was held as "brutal".
"This just shows how insensitive our government is," she told the BBC. "I'm sure this cremation has been held on the direct orders of the king."
Mass demonstrations against King Gyanendra's absolute rule or against the monarchy itself have been going on for over two weeks.
Eyewitnesses said the police had opened fire indiscriminately during Thursday's protests and that in addition to those who died, many had been seriously injured.
Another person died on Friday in the town Gulariya, some 500km (300 miles) south-west of Kathmandu, after being injured in protests a day earlier, reports say.
At least 14 demonstrators have now died around the country in the last two weeks.