Kathmandu - A crowd of Nepalese youths gathered outside the royal palace in the Nepalese capital Kathmandu Thursday calling on the country's last monarch and his family to leave as political leaders hailed the decision to abolish monarchy.

The crowd of about 400 people, chanted slogans in favour of a republic and urged the king to leave as soon as possible.

"Gyanendra must leave the palace," youths chanted. "Long live republic of Nepal."

Police in riot gear later moved into the area and pushed the demonstrators back by nearly a kilometre.

It came a day after Nepal's special assembly voted overwhelmingly to abolish the monarchy, and end the 240-year Shah Dynasty.

The government has banned rallies and demonstrations around the palace as well as Gyanendra's private residence saying it was needed for security.

The gathering was prompted by the news that the royal flag had been lowered by the palace staff earlier Thursday to be replaced by the national flag.

"The move is in line with the ruling of the special assembly on Wednesday," the home ministry said.

Media reports said former king Gyanendra and his family remained at the palace. The special assembly gave him and his family 15 days to vacate.

Gyanendra has not formally commented on Wednesday's vote but is expected to accept the decision and move out of the palace soon.

Politicians close to the former monarch said Gyanendra will not leave the country and go into exile.

The Maoists, who emerged as the single biggest party in the April elections, said he would be allowed to remain in the country as a citizen and pursue his business interests.

Maoist leader Prachanda, who led the decade long insurgency to rid the country of monarchy, expressed his happiness over its formal abolition.

"This is an epic decision that will change the nation," Prachanda said. "We must now concentrate our efforts on converting the country into a federal democratic republic and I congratulate the Nepalese people for their achievement."

"The vote to abolish monarchy has ended the suspicion of the people that we would not be able to achieve our goals," another Maoist leader, Ram Bahadur Thapa, said.

The government declared three days of national holiday to celebrate the declaration of Nepal as a republic. People across the country participated in popular rallies and cultural programmes. (dpa)