(Adds protest, Indian reaction)

By Gopal Sharma

KATHMANDU, Oct 5 (Reuters) - Nepal's elections for an assembly to draw up a new constitution have been delayed after the ruling coalition failed on Friday to break a political deadlock with Maoist former rebels.

The delay is a major blow to last November's peace deal that ended the Maoists' decade-long civil war against the monarchy -- a revolt that caused more than 13,000 deaths.

"We were compelled to change the election date because of the Maoists, who let us down," Peace and Reconstruction Minister Ram Chandra Poudel said.

The Maoists say they remain committed to democracy and will not return to insurgency. But it was unclear when the election, scheduled for Nov. 22, would be held. Poudel said it could be in March or April.

The election was a key demand of the Maoists during their civil war. But they wanted the assembly to abolish the monarchy ahead of polls and give them what they had been fighting for since 1996 -- a republic.

The Maoists walked out of the government last month, after the other political parties opposed fresh demands to abolish the monarchy ahead of the elections and introduce full proportional representation.

Analysts say the Maoists' decision to leave the government highlighted the growing pains of rebels who spent years in the jungles of Nepal but now face the possibility of losing an election as they enter the mainstream.

A special session of parliament, called by the Maoists, will meet on Oct. 11 to debate their demands, officials said.

"We have agreed to delay the election until ... parliament called by us takes a decision on some political issues, including our demand to declare a republic and introduce proportional representation," Maoist spokesman Krishna Bahadur Mahara said.

But Prakash Sharan Mahat, a leader of the Nepali Congress party, the biggest political group in parliament, said the Maoists were unlikely to muster the two-thirds majority required to abolish the monarchy.

PROTEST

The Nepali Congress will oppose the Maoist move to declare a republic through parliament because this has to be settled by a new elected assembly, Mahat said.

The current Nepali parliament was formed in January after a period of absolute rule by the monarchy.

A conclusion to last year's tortuous peace deal would be a sea change for traditional Nepal after centuries dominated by a Hindu monarchy. It would help usher one of the world's poorest nations into the modern era, anti-monarchists say.

Later on Friday, about 1,500 supporters of the Communist Party of Nepal-UML, a key constituent of the ruling alliance, marched in Kathmandu protesting against the delay.

Party leader Amrit Bohara said his group was opposed to the postponement and blamed Prime Minister Girija Prasad Koirala and the Maoists for what he said was their rigid stands that caused the delay.

Influential neighbour India, the European Union, the United States and the United Nations, key donors to Nepal, said they were disappointed over the delay.

An Indian embassy statement said repeated postponement of the vote eroded the credibility and affected the process of democratic transformation and legitimisation in Nepal.

"It is important that all parties firmly commit themselves to quickly establish a new election date," a U.S. embassy statement said.

The Brussels-based International Crisis Group warned the delay could threaten the peace process if there was further drift and erosion of trust between political parties.

"If there is confidence building between political parties then there may be a better chance for creating a secure environment for meaningful election," the think-tank's Nepal specialist Rhoderick Chalmers said.

Many Nepalis were sick of the unsettled politics.

"I am fed up. Political parties must soften their stands and resolve their difference immediately," 37-year-old Bina Pokharel, a Kathmandu housewife, said on Friday.

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