The announcement by the government came a day after its 2.6-billion-dollar budget presented to parliament appeared to have stripped the monarch of any funding.

"The government has deceived the people," Suresh Ale Magar, a Maoist leader and member of parliament, told AFP.

"We are going to challenge this allocation when the budget comes to parliament for approval."

The budget made no mention of funding for Gyanendra but at a press conference Friday, Finance Minister Ram Sharan Mahat said 300,000 dollars was set aside under the category of "prime minister's expenses" for the king.

In previous budgets, cash for the royals had been allocated under a special heading.

"We allocated the budget for the king because although he is in a suspended position, he still exists," the minister said. "But we got rid of the separate budget heading for the palace and heavily slashed the allowance."

Last year's budget for the royal household was three million dollars. The previous year it was 10.6 million dollars.

The king has been under pressure since fiercely republican Maoists signed a peace deal with mainstream parties last year, ending a decade of civil war, and entered Kathmandu's corridors of power.

Since the peace deal brought the Maoists into Kathmandu, the king has been stripped of most of his powers.

Gyanendra's fate is set to be decided after polls in November that will elect a body to rewrite Nepal's constitution -- and decide whether the 238-year-old monarchy should stay or go.