Nepal's Maoists today called off its agitation to indefinitely shutdown the country in a dispute with the president, amid speculations that the former rebels may be on track to end the political deadlock with the government.

Maoist vice chairman Narayan Kaji Shrestha said the party had decided to withdraw the nationwide shutdown. However, he underlined that UCPN-Maoist party will step up the agitation if the row over "civilian supremacy" is not addressed by the ruling coalition.

The Maoist called off its indefinite general strike from January 24 after a top meeting of senior leaders under the chairmanship of its supremo Prachanda. The decision fuelled speculations that the high-level political mechanism (HLPM) to end the deadlock may have made some progress in satisfying the Maoists demand, the nepalnews online said today.

The political parties are deadlocked over the Maoists' demand to rectify the decision of president Ram Baran Yadav, who reinstated General Rukmangad Katawal, the then army chief dismissed by Maoists prime minister Prachanda in May last year.

Nepali Congress and CPN-UML leaders asked the Maoists to call off the agitation to paralyse the country, expressing their readiness to resolve the deadlock through dialogue, the report said. The mechanism also passed its terms of reference (ToR) prepared by the three-party committee.

Political tensions have been high in Nepal since a government led by the Maoist resigned last year amid a dispute with the president over the army chief's refusal to incorporate former Maoist rebels fighters into the military.