Yadav, backed by the Nepali Congress, defeated the Maoists' presidential pick [AFP]

The announcement was made on Tuesday, raising fresh questions about the country's political future.

Krishna Bahadur Mahara, a Maoist spokesman, said: "The party's central committee meeting has decided not to form the government under our leadership.

"After the presidential election, it is certain that we do not have a majority.

"So we do not have any basis to form the next government."

However, he said that the the Maoists were still open to talks with other parties.

The Maoists could have formed the first government since the end of a 240-year old Hindu monarchy in May.

Ramraja Prasad Singh, backed by the Maoists, was defeated in the constitutional assembly by Ram Baran Yadav, an ethnic Madheshi from the centrist Nepali Congress party, on Monday.

No outright majority

The result indicated opposition parties voting against the Maoists, who won the most seats in parliamentary elections in April but not enough to gain an outright majority.

The Maoists had insisted on their own choice of president being appointed before they formed a new government.

The country has been stuck in political limbo since the assembly sacked King Gyanendra in a meeting on May 28.

The Maoists' presence in government is seen as key to the nation's peace process, which put an end to a 10-year civil war in the country.

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