Kathmandu  - Nepal's political crisis escalated on Sunday after political parties missed a deadline set by the president to form a new government.

The deadline, set by President Ram Baran Yadav, passed off at midnight Saturday (1845 GMT).

Officials said the president had an option to extend the deadline to give political parties time to discuss and cobble together a coalition government.

Nepal has been without an effective government after the Maoist-led coalition collapsed in a power struggle with the president last week.

A group of 22 political parties say they will back the moderate Communist Party of Nepal - Unified Marxist Leninist (CPN-UML) to lead the new government.

But the parties were reportedly bargaining for concessions and benefits for their constituents in return for their support.

"We will extend support to that party or leadership that will assure us to implement past agreements and address Madhesi issues including autonomous status for entire southern plains," ethnic Madhesi Janadhikar Forum (MFJ) said.

MFJ, with nearly 60 seats, holds the key for the formation of any government.

The Maoists, who are the single-largest party in the parliament but well short of a majority, have vowed to boycott the government and parliament. They also threatened to keep up street protests until the president revokes his decision to reinstate the army chief sacked by Prime Minister Pushpa Kamal Dahal.

"The president must apologize for his actions and if he not willing to do that, then he must resign," Agni Sapkota, a central Maoist member said. "If he refuses to do either, political parties must cooperate to denounce his step as unconstitutional."

"If either one of our conditions is met, we can support the formation of a new government," Sapkota said.

The crisis erupted after the Maoists sacked army chief Rukmangat Katuwal for insubordination.

The move, opposed by majority of the political parties in parliament, led the president to reinstate the army chief, which prompted the prime minister to resign. (dpa)