MPs in Nepal have unanimously approved a landmark plan to drastically curtail the powers of King Gyanendra, including stripping him of control of the army.
Nepal's king reinstated parliament after mass protests
Under the plans, the royal family will pay tax and parliament will control the army and name the heir to the throne.
The proclamation has been described as a Nepalese Magna Carta, in effect making the king a ceremonial figure.
The move follows mass street protests in April which led the king to recall parliament and end direct palace rule.
Cutting the powers of the king, who seized direct powers in 2005, was a key demand of the pro-democracy protesters who took to the streets across Nepal.
Maoist rebels, who have fought for a republic for 10 years, gave the proclamation a cautious welcome.
Spokesman Krishna Bahadur Mahara said it was a positive move but did not go far enough.
The Maoists want to get rid of the monarchy but most of the governing coalition are non-committal on the issue.
Peace talks between the government and the rebels have been announced, but no date or venue has been set.
The interim government's proclamation overrides the 1990 constitution, which handed most power to parliament but kept the monarchy involved in politics.
The far-reaching measures were unveiled in parliament by the new Prime Minister, GP Koirala.
King Gyanendra's successor will now be decided by parliament
"This proclamation represents the feelings of all the people," he told the house.
The debate had been postponed from Monday while politicians fine-tuned their plans.
Winning parliament's support was never in doubt as governing parties account for more than 90% of MPs in the 205-member assembly.
The plans include:
- bringing 90,000 troops under the direct control of the parliament
- taxing the royal family and its assets
- scrapping the royal advisory council, the Raj Parishad
- removing royal references from the titles of the army and government
- declaring Nepal a secular country, after years as the world's only Hindu kingdom.
The proclamation says it will annul those articles of the current constitution which contradict it, although observers say this is likely to come under challenge in the courts at some point.
Another move quietly made by the authorities was to ban demonstrations in parts of Kathmandu around the government buildings and the royal palace, just as the authorities of the previous royal government did.
The BBC's Charles Haviland in Kathmandu says all the measures appear to be provisional, pending the planned election of an assembly to write a completely new constitution.
He says the new government hopes the change will dampen the anger of people who have been demonstrating in the streets accusing politicians of moving too slowly towards change.