Nepalese politics was thrown into uncertainty Tuesday after the Maoists said they will not stake their claim to form the next government despite being the biggest party in the assembly, reported dpa.
The Maoist decision came a day after the Maoist candidate was defeated in the presidential election, sending the party into emergency meeting.
"We will not stake our claim to form the new government under the present circumstances," top Maoist leader Prachanda told reporters in the capital Kathmandu.
"Because of the events of the past few days and the defeat our candidate in the presidential election, our party believes it should remain in the opposition," Prachanda said. "Our party does not have the moral grounds to stake its claim to form the government."
Prachanda also criticised the new alliance between the Nepali Congress, Communist Party of Nepal - Unified Marxist Leninists (CPN-UML) and the ethnic Madhesi People's rights Forum (MPRF) as "unethical."
"We have serious objections on the way the majority was obtained by the new political alliance during the presidential election which was influenced by the feeling of vengeance," Prachanda said.
The Maoists emerged as the biggest party in the constituent assembly with 210 seats following April elections but are well short of a majority.
On Monday, the Maoist-backed candidate Ramraja Prasad Singh was defeated in a presidential runoff by Nepali Congress candidate Ram Baran Yadav.
The Maoist defeat was possible because of a new three-party alliance which has the backing of fringe party, giving the block a majority in the 601-member assembly.
"The new political develop is likely to impact the drafting of the new constitution by the assembly," political analyst Deepak Bhattarai said.
"Each clause of the constitution needs a two-thirds majority in the assembly and must be completed within two and half years but with growing difference between the parties, it will be very difficult to achieve that."
The Maoists gave up their decade-long communist insurgency after the fall of king Gyanendra's government in April 2006.
Since then, a constituent assembly was elected to draft the new constitution which abolished monarchy earlier this year to declare the country a republic.