(Recasts with Koirala quotes, colour, analyst)

By Gopal Sharma

KATHMANDU, Jan 15 (Reuters) - Nepali Maoists took their seats in a newly created interim parliament on Monday, in what the country's prime minister called the start of a "new Nepal" on the path of reconciliation after a decade of civil war.

The formal entrance of the Maoists into the political process caps a landmark peace deal that has seen them move from guerrilla fighters to politicians in less than a year.

"This is the beginning of a new reconciliation and of a new Nepal," Prime Minister Girija Prasad Koirala told the old parliament, before it dissolved itself.

"What is a bigger achievement than this?"

Earlier on Monday the previous House of Representatives passed a new interim constitution before dissolving itself, paving the way for the new body, which now includes 83 nominees from the former rebels, making them the second biggest party.

Monday's developments effectively signal the end of a civil war that has killed around 13,000 people.

"This is a historic event," Koirala said.

The next step will be the formation of an interim government, which will also include the Maoists, and then the holding of elections to a special assembly meant to draft a new permanent constitution and decide the monarchy's future.

The sight of 83 Maoist nominees sitting alongside mainstream politicians may comfort even the most cynical Nepalis, who have seen their impoverished country brutalised by state and rebel killings and its tourism-dependent economy shattered.

Analysts say the Maoists have signalled their commitment to democratic politics and to abandoning their insurgency.

"This is the most important event so far (in the peace process), which confirms the Maoists' declared intention to be part of the competitive parliamentary system," said Yubaraj Ghimire, editor of the weekly magazine Samay.

The oldest member of the new parliament, 86-year-old Bal Bahadur Rai, administered the oath of office in Nepali, with delegates swearing before God to uphold the interim constitution.

SMILES AND HUGS

Many of the new Maoist deputies entered the 330-seat parliament wearing grey-coloured jackets, with one dressed in saffron Buddhist robes and another limping in on crutches.

They hugged MPs from the mainstream parties and shook their hands, smiling broadly.

Earlier, the Maoists had been upbeat ahead of their big day.

"This is the achievement of 10 years of people's war waged by the Nepali people," Maoist leader Khim Lal Devkota told Reuters before the interim constitution was passed.

The Maoists began fighting the monarchy in 1996, but declared a ceasefire last year after mass street demonstrations forced King Gyanendra to give up direct rule.

They now hope the constituent assembly will deliver what they had been fighting for -- an end to Nepal's centuries-old monarchy and the establishment of a republic. Elections for that assembly are supposed to be held in June.

In November, the multi-party government and guerrillas struck a peace deal declaring an end to the conflict in the Himalayan nation, landlocked between Asian giants India and China.

Under the pact they agreed to lock up their weapons under U.N. supervision in return for a promise by Koirala to name them in an interim government.

Royalists and other critics say the interim constitution gives too much power to the prime minister, including the right to appoint the chief justice of the Supreme Court.

The Maoists, who have vowed not to return to war, were also set to start storing their arms in metal containers under U.N. supervision on Tuesday, but keep the keys as part of the deal.

The United Nations wants the Security Council to authorise up to 186 monitors to help enforce the peace pact.

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