A total of 182 Maoist prisoners detained under a scrapped anti-terror law have walked free from jails in Nepal.

"We have received reports of 182 Maoist prisoners being released from various jails across the country," home ministry spokesman Baman Prasad Neupane told AFP Tuesday.

A young girl (L) and a family member welcome a Maoist student with a vermillion smeared face and garlands upon his release from Nakhu jail near Kathmandu. A total of 182 Maoist prisoners detained under a scrapped anti-terror law have walked free from jails in Nepal. [AFP]

"We have been released due to the people's struggle," said Himal Sharma, a former general secretary of a Maoist-affiliated student union group, as he was released from Nakkhu jail in the capital.

Hundreds of well wishers and family members met the prisoners, who raised their fists in a communist salute and chanted Maoist slogans as they were released Tuesday afternoon.

They were greeted with flower garlands and sprinkled with red celebratory powder.

Sharma had been held for the past two years in Nakkhu jail under the Terrorist and Disruptive Activities (Control and Punishment) Ordinance (TADO) laws.

The new government and Maoist rebels have been observing a ceasefire for more than a month after King Gyanendra was forced to end 14 months of widely criticized direct rule in April.

Dilendra Prasad Badu, deputy minister for information and communication, told AFP Monday that the government has decided to drop cases against prisoners held under the royally imposed TADO.

Prisoners detained under the ordinance are "in the process of being released," he said, without giving numbers.

TADO, which was introduced in October 2002 in an effort to tackle the Maoist insurgency, needed renewing every six months but has been allowed to lapse by the new government.

"TADO is no longer in effect," the home minister said Monday.

The rebels want all their prisoners released before entering full peace talks. Prior to the ceasefire there were around 1,500 Maoist prisoners.

Since the rebels began their "people's war" in 1996, at least 12,500 people have been killed.

The new government and rebels have held one day of preliminary peace talks, and more talks are expected this week.