US Assistant Secretary of State for South Asian Affairs Christina Rocca Tuesday called for urgent reconciliation between Nepal's political parties and its king Gyanendra.

The US feels that Gyanendra caused a "serious setback" in the battle against Maoist insurgency by grabbing power and that the "need of the hour is reconciliation", Rocca said here.

She was speaking on Nepal-US relations at a programme organised by the Institute of Foreign Affairs and the American Center.

Rocca made it clear that Washington's primary concern was the nine-year-old "brutal" Maoist insurgency that has claimed over 11,000 lives and caused widespread destruction.

While critical of the Feb 1 royal takeover, the US would support the Nepal government to counter the rebels but the aid would depend on the regime's human rights record, said Rocca, whose three-day visit ends Wednesday.

Development aid from the US to Nepal jumped dramatically in the past two years, from $24 million to $42 million annually.

About $23 million is earmarked for basic health programmes and the rest for anti-trafficking, hydropower development and other sectors.

Security assistance in the past four years has amounted to $22 million.

"The Maoists have made clear their intention to impose a one-party 'people's republic', collectivise agriculture, 're-educate' the so-called class enemies and export their revolution to neighbouring states," Rocca said.

"We feel that such a regime would almost certainly threaten stability in the region. Much if not all of the progress that the US and others have helped Nepal accomplish in development and democratisation would be negated."

Rocca was critical of King Gyanendra, saying the events of Feb 1 - when the monarch took over with the help of the army and imposed a state of emergency - were a "serious setback" to Washington's desire to see Nepal as a "peaceful, prosperous and democratic country where civil and human rights are protected".

She reiterated that while the US welcomed the lifting of emergency April 29, it remained concerned about reports of "continuing repression of civil liberties and additional arrests.

"We continue to urge the government to release all political detainees, restore civil liberties and reach out in a pro-active manner to the political parties."

Rocca, who also met leaders of major political parties, said the key to tackling insurgency and underdevelopment was that the parties and the king unite in a "multi-party democratic framework".

Calling the formation of a seven-party alliance an "encouraging first step", she stressed on "reconciliation and developing a joint road map to deal with the Maoists and working for a peaceful and prosperous Nepal.

"We remain concerned about the widespread suffering of the Nepalese people... from abuses and atrocities by Maoists and also through human rights abuses by security forces," Rocca said.

"We continue to check on military units to ensure that none implicated in human rights violations receives US assistance. We expect to see appropriate, timely and transparent investigations of any credible allegations of abuse. Failure to do so could jeopardise our ability to continue assistance."