Nepal's Maoist rebels have announced a three-month unilateral truce, after street protests forced the country's monarch to restore parliament.
Life is starting to return to normal in the Himalayan kingdom
The Maoists had earlier said King Gyanendra's move did not go far enough towards meeting their demands.
Leaders of parties about to form an interim government have welcomed the rebel move. There has been no response from the government yet.
Meanwhile the US has hinted at an early resumption of military aid to Nepal.
'Glimpse of peace'
Nepalis may at last be getting a glimpse of peace, says the BBC's Charles Haviland in Kathmandu.
The Maoists, who have been waging a decade-old insurgency, said they now wanted to see a new constitution drawn up.
A statement issued by rebel leader Prachanda said the group would refrain from "offensive military action" for a three-month period.
But he added that the rebels would remain in an "active defensive position".
The rebels observed a three month ceasefire last year. The government dismissed it as a ploy and did not reciprocate.
The US Ambassador to Nepal, James Moriarty, said that his country would now consider a request for military assistance from the Nepalese government.
He said the Maoists could not be trusted until they laid down their weapons and renounced violence.
Prachanda said he hoped the ceasefire would encourage the formation of a new constituent assembly tasked with rewriting the constitution.
The rebels have announced plans to hold a mass meeting on Friday in Kathmandu, just before parliament meets again for the first time in four years.
Our correspondent says that the rebels have not been able to operate openly in the city since 2003.
The Maoists, who control vast parts of the countryside, had earlier lifted their blockade of the capital, Kathmandu.
They did so in response to a demand by Girija Prasad Koirala, nominated as the next prime minister by opposition parties, who said people had suffered under the blockade.
Opposition leader GP Koirala called for an end to the blockade
The capital is now starting to return to normal. Taxis are back on the streets, shops have reopened and mobile phone connections have been restored but there remains a high police presence.
On Tuesday, the king's announcement allowing parliament to be restored brought thousands of celebrating Nepalis on to the streets of Kathmandu.
The king seized absolute power in 2005, accusing politicians of failing to tackle the Maoist rebellion.
Some 13,000 people have died since the Maoists took up arms against the king in 1996.