Britain is to give £36.5m to Nepal to boost the country's peace process.
Ministers have been sworn in as part of Nepal's interim government
Development minister Gareth Thomas, on a visit to the country, said the package would help build a "peaceful and democratic Nepal".
Maoist ex-rebels joined the country's interim government on Sunday under a peace deal that ended 10 years of bloody civil war.
The UK government's money will help debt relief, aid development and go to a peace trust fund.
Five Maoist ministers have joined the government under the peace deal and the election of a constituent assembly, which will determine Nepal's future course, has been set for 20 June.
The British government has pledged to give £4.6m to Nepal immediately.
This includes £2.3m in debt relief and £1.5m for the government Peace Trust Fund, which will monitor the progress of the peace agreement and support free elections in June 2007.
A longer term investment will be made up of £8.5m for the peace fund and £23.5m in debt relief between 2008 and 2015.
The Department for International Development also said it was increasing its development programme in the country from £37m in 2006/2007 to £43m in 2007/2008.
"The formation of the interim government is a step down the path of lasting peace in Nepal," said Mr Thomas.
Decade of conflict
Up until last year's truce, the Maoists were engaged in a violent civil conflict with the state, based in the mountains and jungles.
Now they are joining the government as the Communist Party of Nepal (Maoist) and the constituent assembly, to be elected in June, will chart out Nepal's future.
It has to decide, among other issues, whether Nepal will remain as a kingdom or become a republic, as the Maoists want.
King Gyanendra relinquished key powers amid street protests last year, prompting the Maoist truce.
That ended a decade of civil strife during which at least 13,000 people died.