Nepal?s King Gyanendra unveiled a 10-member cabinet under his leadership yesterday, a day after he sacked the prime minister for failing to hold elections or end an escalating civil war with Maoist rebels.

Life carried on as normal on the streets of Kathmandu, but the rebellion-racked country remained virtually cut off from the rest of the world a day after the king assumed power in place of sacked prime minister Sher Bahadur Deuba.

Indian television said the king had placed many politicians under house arrest. All phone lines in and out of Nepal remained cut, and air links were still disrupted after several flights were turned back the previous day.

The king?s decision to take power for the next three years has drawn condemnation from the United States and from neighboring India. But many Nepalis seemed happy to see the back of politicians widely regarded as corrupt and incompetent.

<B>Increased security</B>

?We?re very happy,? said Simon, a bystander in the center of town. ?This will help restore order. He?s a good man, but the politicians are corrupt. We have more chance of peace.?

On a clear and sunny day in Kathmandu, life was much as before, with children in uniforms going to school and no sign of increased security, apart from the usual army patrols.

Soldiers in blue fatigues and carrying automatic weapons seemed relaxed, and there was no sign of reinforcements outside the royal palace, which is hidden away behind high walls and metal grill gates, or at the white parliament complex.

Newspaper seller Meena Gajurel sat amid piles of papers on a cobblestone pavement in the Thamel tourist area, a red shawl protecting her against the chill winter air.

?I?m selling twice as many papers today,? she said. ?In their happiness, people are buying more. After the announcement, people are very happy.?

Among those appointed to the new cabinet were Dan Bahadur Shahi as home minister and Ramesh Nath Pandey as foreign minister, New Delhi Television (NDTV) network said.

The Nepalese Embassy in Delhi said the king would supervise the cabinet, and no prime minister had been appointed.