Nepal's King Gyanendra sacked the government, declared a state of emergency and assumed power on Tuesday, saying the leadership had failed to hold elections or to restore peace amid an escalating civil war with Maoist rebels.

The king had taken power for the next three years, and placed many politicians under house arrest, residents and Indian media said.

The strategic Himalayan nation sandwiched between India and China is locked in a bitter three-way struggle between the king, the Maoist rebels and political parties who are themselves often bitterly divided.

The king, who is frequently accused of overstepping his powers, reappointed Prime Minister Sher Bahadur Deuba only last June, two years after sacking him for the same reasons he cited this time -- inability to tackle the long-standing revolt against the monarchy and failure to call an election.

In January, Deuba had promised to go ahead with the election despite the civil war and the Maoists' refusal to come to peace talks by a Jan. 13 deadline.

But many members of Deuba's own cabinet were known to be unhappy with the election plan on the grounds it was unrealistic in a country where the rebels control much of the countryside.

Nepal is one of the world's poorest nations and its only Hindu kingdom. Many people still view the king as a reincarnation of the ‘god’ Vishnu.

But the monarchy's reputation dived in 2001 when Crown Prince Dipendra killed his father, the popular King Birendra, and several other members of the royal family in a palace massacre. He then turned the gun on himself.

Gyanendra was crowned king after the massacre, but has never been as popular as his brother Birendra.

PHOTO CAPTION

Nepal's King Gyanendra listens to one of his subjects near Kathmandu in this May 17, 2004, file photograph. (Reuters)