The former Maoist guerrilla leader of a decade-long insurgency against Nepal's Hindu monarchy will take over as prime minister in alliance with the mainstream opposition.

Pushpa Kamal Dahal, who goes by the alias Prachanda, meaning "terrible" or "fierce," will lead the new government for the first half of a five-year term, with the support of the opposition United Communist Marxist-Leninist Movement. According to local media reports, Prachanda will step down in 2025, giving way to the UML.

"This is the understanding. Remaining work of distribution of key other posts and ministries is still to be worked out," Dev Gurung, the general secretary of Prachanda's Maoist Centre party told Reuters after a meeting of the new coalition.

UML Secretary General Shankar Pokhrel said the new deal paved the way for the formation of a new government more than a month after the election.

The new coalition comes after Prachanda, 68, unexpectedly quit the ruling alliance led by Prime Minister Sher Bahadur Deuba of the Nepali Congress Party. Deuba refused to support Prachanda as prime minister.

Since 2008, when the 239-year-old monarchy was abolished, Nepal's government has changed 10 times.