Only ten days ago there were allegations that the generals of Nepal Army were making plans of a ’soft coup’ to tackle Maoist’s plan to dismiss the Army chief .
Binaj Gurubacharya  at The Huffington Post provides the background:
“Dahal, a former Maoist rebel leader, sacked army chief Rookmangud Katawal on Sunday after the two quarreled over the enlistment of former rebels into army ranks. President Ram Baran Yadav, who officially commands Nepal's military, rejected Dahal's decision and ordered Katawal to return to work in a late night notice.
Nepal's Maoists fought a bloody, 10-year war against the government before joining the political mainstream in 2006 and winning the most votes during elections last year after the Himalayan country abolished its centuries-old monarchy. However, many of the former Maoist fighters remain restricted to U.N.-monitored barracks under a peace accord.
Dahal wanted them freed and integrated into the military, as prescribed under a U.N.-brokered peace agreement. But Katawal resisted those efforts and sparred repeatedly with the government over the issue.”
Here is the video of the Prime Minster’s press meet [In Nepali], where he announced his resignation and accused the President of staging a “constitutional coup” by reinstating sacked army chief Katwal.
Prachanda said that the President's action is unconstitutional and alleged that foreign powers and his political rivals pushed Nepal’s figure head President to defy his decision.
Neil's Nepal explains  the constitutional issue regarding the President's letter:
What should be plain to all here is that there is nothing unconstitutional about the defense ministry sacking the army chief. However, there is nothing constitutional about a ceremonial president giving orders countermanding such a proposal. This letter is tantamount to authorization to conduct a military coup. We shall see how the Maoist contingency plans hold up.
At United We Blog , readers seem divided over Prachanda’s decision to quit. Some have praised him for keeping his word but some accuse him of being reckless.
Ahimsa comments that:
“(Royal) Army has taken over!. By blocking the integration of PLA into the National Army, the (Royal) Army has successfully spoiled the peace process in Nepal. They will most likely now try to enrage and radicalize the Maoists to get the public consent to impose martial law. Bye, bye Republic of Nepal.”
Nepali’s views are very different from Ahimsa:
“when pm dares to make such foolhardy and reckless decision , what a general Nepali can expect from him…….except resignation”
Nepali language blog Mysansar  is also covering the ongoing political crises in Nepal. In a post on the Prime Minister’s resignation, it claims that now the main opposition party Communist Party of Nepal (United Marxist and Leninist) (UML) is in the race to form new government under the leadership of its former General Secretary Madhav Kumar Nepal.
A reader, Lax, at Mysansar, commenting on Prime Minister’s resignation says that the people’s aspirations for better future are being quashed for political goals:
“It’s the same game again, we have seen over and over in the Nepali politics. A selfish and power hunger struggle in the name of general public’s interest. It’s even a sad tragedy to see the same public being played and swayed again and again by the same so called corrupt leaders who have already deceived and shown their true colors in the past. Nepali Janta never learns a lesson. As long as these leaders are alive, nothing is going change at all. Don’t let anybody use you. Come out of that unconsciousness and decide your fate yourself.”
Late breaking news from Kathmandu, as reported by Republica , says that the Maoists have announced new round of protest against the President.
“A secretariat meeting the Unified Communist Party of Nepal (Maoist) has decided to intensify struggle in the parliament and the street until President Dr Ram Baran withdraws his “unconstitutional” move. [..]”