Nepal's prime minister promised on Wednesday to turn Nepal into a federal state after this year's constituent assembly elections, a move to stem protests by ethnic Madhesi people in which 11 people have died.

Prime Minister Girija Prasad Koirala also vowed to redraw constituencies for the planned vote, the first in eight years, on the basis of population and geography to raise the representation of different groups, including the Madhesi people, in the assembly.

Hours after his comments, Madhesi protesters clashed with police in Biratnagar, Koirala's home town in southeast Nepal. A police officer and a protester were killed, police said.

Protesters ransacked a police post and stole a pistol, two rifles, a police official said.

A group behind recent bloody unrest in southeastern Nepal urged

yesterday the nation's prime minister to act swiftly on his offer of talks to prevent further deadly protests.

The Mahadhesi Janadhikar Forum welcomed the premier's pledge on Wednesday for discussions to resolve the unrest in Terai region, the impoverished lowlands bordering India.

"We welcome the call for dialogue, we are in favour of it. But the government should form immediately a team," said Upendra Yadhav, leader of the forum, the main group involved in the protests.

"The government is not taking the unrest seriously enough," Yadhav told AFP.

At least two towns remained under curfew on Wednesday as the protests continued to cripple Terai, Nepal's economic and industrial hub which borders India.

Protests from Madhesi people, who live in Nepal's fertile southern lowlands, have cast a shadow over the landmark deal in 2006 that declared an end to the decade-old

Maoist revolt in which more than 13,000 people were killed.

The constituent assembly, a key demand of the former Maoist rebels, is meant to draw up a permanent constitution for the country and map out its political future.

"The new constitution to be prepared by the constituent assembly will create a federal democratic system," Koirala, wearing a black Nepali cap and a matching jacket, said in a nationally televised address.

The move is seen aimed at ending centuries of central rule and appeasing ethnic groups complaining of government neglect.

"We are passing through epochmaking times in the history of our country. Therefore, everyone must contribute to make free, fair and peaceful elections possible," Koirala said.