Nepal's prime minister called new elections for November after the term of the Constituent Assembly expired at midnight Sunday without political leaders completing the task of writing a new constitution.
Prime Minister Baburam Bhattarai said the Constituent Assembly had failed to achieve its goal.
"We have no other option but to go back to the people and elect a new assembly to write the constitution," Bhattarai said in his announcement broadcast live over television.
Bhattarai said he would be leading a caretaker government until the Nov. 22 elections.
The Constituent Assembly was elected to a two-year term in 2008 to draft a new constitution but has been unable to finish the task. Its tenure has been extended four times, but the Supreme Court rejected any further extensions.
Leaders of the main political parties met Sunday but failed to reach any agreement.
States based on ethnicity
The four main parties were attempting to resolve differences over whether the states to be created by the constitution should be determined on the basis of ethnicity.
The debate has brought street protests and demonstrations from factions who oppose and support the idea of drawing up states based on ethnicity.
Police clashed with protesters Sunday outside the Constituent Assembly, where political leaders were meeting in a last-minute attempt to agree on a new constitution before the deadline.
Thousands of protesters opposed to the idea of creating states on the basis of ethnicity tried to push through a riot police line on the northern side of the assembly hall. Police pushed them back and a scuffle ensued, with the protesters throwing stones and police responding with tear gas and batons.
Three policemen and several protesters were injured.
On the other side of the assembly hall, thousands of people demonstrated in support of states based on ethnicity. A thick police line kept the opposing groups apart.
State of emergency discussed
Finance Minister Barshaman Pun, also a member of Bhattarai's Communist Party of Nepal (Maoist), said the government had even discussed imposing a state of emergency but was not able to do so because they could not meet the requirements for taking such an action.
Security forces have been placed on high alert.
The prime minister's announcement came at midnight when the streets were already deserted and protesters had already gone back home.
The assembly was elected in 2008 two years after pro-democracy protests forced the king to give up his authoritarian rule and restore democracy in Nepal.
The assembly immediately abolished the centuries-old monarchy and converted Nepal into a republic.
The political parties have been able to resolve some other thorny differences in the past, including the future of thousands of Maoist rebel fighters who were confined to camps after giving up their armed revolt in 2006. However, they have not been able to agree on the ethnic issue.