Many Nepalis believe the deal can lead to peace
On Friday, the Nepalese government said it would dissolve parliament and set up an interim government that would also include the Maoists.
It followed landmark talks between the rebel's reclusive leader, Prachanda, and Prime Minister GP Koirala.
Nepal's 10-year Maoist insurgency has left around 13,000 people dead.
The agreement... is very promising but there are lots of challenges
Ram Chandra Poudel
Nepali Congress leader
Analysis: What now for Nepal?
The BBC's Charles Haviland in Kathmandu says that there is a sense that peace is tangibly closer, but there is some concern that the accord makes no mention of the rebels abandoning violence.
One newspaper described the agreement as a "giant leap forward".
"This is a landmark agreement that has resolved an armed conflict through peaceful means," Bharat Mohan Adhikary of the Communist Party of Nepal (UML) told the Associated Press.
His party is the second largest in the country and a member of the ruling alliance.
Concern
But some politicians are more cautious and our correspondent says fear that too much has been conceded to the rebels.
STEPS TO PEACE 6 April: Mass anti-king protests break out 24 April: King reinstates parliament, gives up direct rule 30 April: Parliament votes to hold constituent assembly polls 26 May: Preliminary peace talks begin with Maoists 2 June: First Maoist rally in capital in three years 16 June: Peace talks lead to Maoist accord
"The agreement reached in an effort to restore peace is promising but there are lots of challenges," Ram Chandra Poudel, general secretary of the governing Nepali Congress, is quoted as saying by AFP.
The radical agreement will sweep away Nepal's recently restored parliament, 16-year-old constitution, and coalition government.
It will also get rid of the parallel government the Maoists run in much of the countryside.
But many point out that the Maoists have not renounced violence or mentioned decommissioning arms.
It was Prachanda's first visit to Kathmandu in 25 years
"We shouldn't believe the Maoists too soon," Kedar Prasad Humagain, a 32-year old grocer, told AFP.
"They still have not totally stopped extortions, intimidation and other sorts of violent activities."
Friday's talks in Kathmandu were the first formal ones between the government and the rebels.
Their joint statement formalised in writing an understanding reached at the height of widespread protests against the rule of King Gyanendra in April.
But differences remain between the two sides over the future of the monarchy. The rebels hope elections will clear way towards abolishing the monarchy, but the prime minister has ruled that out.
Nepal

 Die nepalische Regierung wird das Parlament auflösen und mit den Maoisten eine Interimsregierung bilden. Das haben beide Seiten nach Friedensgesprächen zwischen Premierminister Girija Prasad Koirala und Maoistenführer Prachanda am Freitag, dem 16. Juni, in Kathmandu erklärt. Ein Zeitrahmen wurde nicht vereinbart. Prachanda betonte, dass die Maoisten anstrebten, die Regierungsbildung innerhalb eines Monats abzuschließen. Nach der Bildung der Übergangsregierung wollen die Maoisten ihre Machtstrukturen in ländlichen Gebieten abbauen, so genannte „Volksregierungen“, die es vor allem im entlegenen Westen Nepals gibt. Uneinigkeit zwischen Regierung und Rebellen gibt es noch in der Frage, ob die Monarchie abgeschafft werden soll. Die Regierung plädiert für einen Erhalt der Monarchie, nachdem sie die Machtbefugnisse und Privilegien des Königs stark beschnitten hat.

Politik und Presse in Nepal haben die Ergebnisse der Verhandlungen, die ein Ende des zehnjährigen Aufstandes der Maoisten einleiten könnten, weitgehend positiv aufgenommen. Einige Kritiker betonen, dass die Zugeständnisse an die Maoisten zu weit gingen und dass die Rebellen nicht erklärt hätten, ihre Waffen abzugeben.

Der maoistische Aufstand und die bürgerkriegsähnlichen Zustände in Nepal haben in den letzten zehn Jahren 13.000 Menschen das Leben gekostet. Im Februar 2005 hatte König Gyanendra die Regierungsmacht an sich gerissen, das Parlament aufgelöst und die Regierung abgesetzt. Nach massiven Protesten hatte Gyanendra seine Alleinherrschaft im Mai dieses Jahres aufgegeben.