The changes drafted in an agreement signed Sunday between the Himalayan country's seven political parties, including the Communist Party of Nepal (Maoist), will be implemented following the elections and formation of a constituent assembly.
Sunday's pact signaled an end to a three-month-long political crisis in Nepal after anti-monarchy Maoists walked out of the government demanding the establishment of a People's Republic of Nepal and changes to the election system.
Political parties agreed that 601-seat Constituent Assembly would have 240 members elected directly by voters and 335 members elected under a proportional representation system, with 26 nominated by the prime minister.
However, if the current king attempts to prevent the April elections, the interim parliament with a two-thirds majority could remove the monarchy even before the polls.
The popularity of Nepal's monarchy plummeted after the beloved King Birendra, and almost the entire royal family, were wiped out in a massacre in 2001, and the new monarch King Gyanendra assumed absolute power in 2005.
In April 2006 pro-democracy mass street protests forced the king to abandon direct rule and restore parliament.
The country was been ripped apart by a 10-year civil war, which started in 1996 and left around 13,000 people dead.