Nepal's president gave the government and opposition parties until Aug. 21 to form a national government after Nepal's prime minister resigned following six months of stalemate.
Nepal's Maoists had pressured the prime minister to resign since he replaced their leader a year ago. As the largest party in parliament, they hope to lead the next government.
Political consensus on key issues surrounding the country's peace process will now be even more difficult as the Maoists gear up to become the main opposition party, analysts say.
Prime Minister Prachanda resigned Monday after coalition partners and the president opposed the move.
Maoist leader steps down in the country's worst crisis since a peace deal in 2006 ended more than a decade of civil war.