Nepal's Maoist rebels have welcomed the new interim government's offer for a truce and have agreed to hold peace talks.

The government made the offer Wednesday after the new Cabinet matched the insurgents' ceasefire declaration and said it would drop terrorism charges against them.

This will be the third time the two sides will try to end the decade-old Maoist insurgency that has claimed 13,000 lives. The earlier attempts failed.

The new Cabinet has also started the process of reversing actions taken since the king took absolute power in February 2005. The Cabinet has annulled municipal elections held three months ago.

King Gyanendra agreed to restore multiparty democracy after thousands of people took to the streets for 19 straight days despite shoot-on-sight orders for the police. At least 17 protesters were killed by police bullets. The Cabinet has announced compensation for the families of those killed.

Some information for this report was provided by AFP, AP and Reuters.