Nepal's outlawed Maoist party has expelled its moderate third-in-command, Baburam Bhattarai, local media said, amid reports of disagreement among rebels over an invitation for peace talks.

Several newspapers and the state-run news agency RSS reported that Bhattarai and his wife, Hishila Yemi, had been expelled from the politburo of the Communist Party of Nepal (Maoist).

Maoist sources contacted by AFP have neither confirmed nor denied the reports.

King Gyanendra offered unconditional talks with the rebels soon after he seized power in the Himalayan kingdom on February 1, but the rebels have yet to respond formally.

Gyanendra defended the power grab as necessary to crush a Maoist rebellion that has killed more than 11,000 people since 1996.

Bhattarai is the third most senior official in the ranks of the rebels, who are fighting to install a communist republic in Nepal.

He lost his position as second-in-command last year after he strongly criticised rebel leader Pushpa Kamal Dahal, also known as Prachanda.

News that Bhattarai and his wife had been expelled came amid reports in Kathmandu that the Maoist party had split into two factions - one favouring peace talks with the king and the others seeking to continue the conflict.

The Maoists held a nationwide 14-day transport blockade shortly after the king assumed power which sent food prices soaring as supplies dried up.

At the weekend, Prachanda called another transport blockade effective Monday and to run until April 1.