Mr Nepal urged the Maoists to end their strike
Nepalese Prime Minister Madhav Kumar Nepal has refused to step down, despite a mass street protest held by the Maoists in the capital, Kathmandu.
In a televised address, Mr Nepal urged more than 100,000 demonstrators to continue talks to find a compromise.
The Maoists, the largest party in parliament, want to lead a national unity government. They vowed to launch an indefinite strike on Sunday.
Correspondents say the peace process may be in danger of collapsing.
It ended 10 years of conflict.
Saturday's march went ahead despite last-minute talks between Maoist leaders and senior government officials.
"I appeal to the Maoists to end their strike call," Mr Nepal said, accusing his opponents of trying to topple the government from the streets.
Maoists say they will increase pressure on the government
"Shutting down the nation is not the way to find a solution to this impasse," the premier added.
In response, Maoist leader Pushpa Kamal Dahal told his cheering supporters in Kathmandu that the party would launch an indefinite strike on Sunday.
"We're compelled to call for an indefinite strike from tomorrow because of the government's lack of concern about taking the peace and constitution-making processes forward," he said.
"Revolution and major political changes in Nepal have come through street protests," he added.
Earlier this week he said he had "no alternative" but to increase pressure on the government, which he said had no intention of drawing up a new constitution by a deadline of 28 May.
The Maoists say that the current cabinet is not supported by the people and that it must be replaced by a national unity government, the BBC's Joanna Jolly in Kathmandu reports.
In disciplined groups, the Maoists marched from 18 points into a park in central Kathmandu, the BBC's Joanna Jolly in the capital reports.
Many waved red flags and chanted: "Dissolve this puppet government and set up a national government."
AFP news agency quotes police as saying there were 150,000 demonstrators - much lower than Maoist estimates of 600,000.
Security forces have been put on high alert, with 15,000 police patrolling the streets. There have been no reports of any violence.
The Maoists, who ended their rebellion in 2006, have the largest number of seats in parliament.
They resigned from government a year ago, after the president overruled their decision to sack the army chief.
In recent months, Maoist-led strikes and protests have brought Kathmandu to a standstill.