By Gopal Sharma KATHMANDU, Feb 18 (Reuters) - Nepal's main political parties said on Monday they had reached an agreement to set up a unity government before a national election in the middle of the year, in a deal that could end a deadlock after a decade of civil war. Maoist Prime Minister Baburam Bhattarai, 58, will step down and Chief Justice Khil Raj Regmi of the Supreme Court will head the new administration to oversee the vote in May or June, the parties said.

By Gopal Sharma KATHMANDU, Feb 7 (Reuters) - Nepal's Maoist party has for the first time laid down the condition on which its prime minister would resign, paving the way for an end to a political deadlock with opposition parties that has paralysed one of the world's poorest countries. Baburam Bhattarai has agreed to step aside provided that opposition parties accept the chief justice of the Supreme Court as the head of a unity government to oversee national elections, delegates to a party conference said on Thursday.

Nepal's Maoists vowed Saturday never to return to guerrilla warfare and offered to give up leadership to an independent prime minister to take the Himalayan nation towards democracy. Party leaders said at their general convention they would step down from government to seek a popular mandate to lead a "socialist revolution", six years after a decade-long insurgency which toppled the world's last Hindu monarchy.

Thousands of Nepal's former rebel Maoists gathered Saturday for their biggest show of strength since taking up arms in a 10-year insurgency and toppling the world's last Hindu monarchy. Party leaders who swept to power in 2008 elections following a peace deal, are using a general convention in the southern industrial hub of Hetauda to shore up grassroots support amid growing disillusionment among the rank-and-file.