By Gopal Sharma

KATHMANDU, April 2 (Reuters) - Nepal's politicians and media hailed on Monday the entry of Maoists into an interim cabinet as finally ending a civil war but scepticism remained whether the once-feared rebels were fully committed to democracy.

The Maoists, who agreed to a peace deal last year after a decade-old insurgency in which 13,000 people died, took five cabinet posts in the multi-party government on Sunday after days of haggling with coalition partners about portfolios.

"We have come to a new place to create a new Nepal," Maoist chief Prachanda, whose nom de guerre means "terrible" or "militant", was quoted as saying by local media on Monday.

The government has hailed Maoists' entry as the beginning of a new chapter in Nepal's history.

The Maoists have already joined an interim parliament, locked nearly 3,500 weapons under United Nations supervision and confined 31,000 fighters to camps under the November peace deal.

But some Nepalis worry the Maoists, who still control swathes of the countryside by what critics say is fear and intimidation, could use their entry into the mainstream to ride roughshod over democracy and push their revolutionary agenda.

Nepali media have reported that Maoists prevent other mainstream political parties from going into areas they control.

"We have to wait and see until the Maoists give up arrogance of arms, stop kidnapping people and terrorising them," said 50-year-old company employee Chetnath Pandey.

Some politicians say the Maoists have not turned in all their weapons to the United Nations. The United States has said the Maoists need to finally renounce violence.

"Maoists must return the property they seized from the people during the war and ensure the safe return of people to their homes," said Dil Bahadur Chhetri, a construction worker.

A LEAP FOR NEPAL?

Coverage from local newspapers underscored the atmosphere of euphoria mixed with worry.

"Nation takes a leap," read a banner headline in English daily, The Kathmandu Post.

But it was blunt about the Maoists.

"We want to tell the Maoists in unambiguous terms that a party in government can't intimidate people; can't carry guns; can't extort from businesses or commoners; can't seize or hold someone else's private property," it said in an editorial.

The government has conceded the key demand of the Maoists to hold elections for an assembly to draw up a new constitution and decide the future of the monarchy, the Maoists want abolished.

Analysts said in the run up to the elections expected on June 20 the interim government must engage several ethnic groups, mainly the Madhesis living in Nepal's southern plains, where dozens have died in anti-government protests this year.

The Madhesis are demanding autonomy for their region saying they were discriminated against in government jobs and seats in parliament by the ruling elites dominated by the highlanders.

"The government must engage the Madhesis in dialogue. If ignored they could create more trouble in future," said Lok Raj Baral of the Nepal Centre for Strategic Studies, a private think-tank.

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