Nepal's newly elected prime minister has been sworn into office, but his party's main coalition partner says it will not join the government.

Sushil Koirala was sworn in by president Ram Baran Yadav on Tuesday at the president house in Katmandu. Koirala was expected to announce a small cabinet but appointed only Ram Sharan Mahat as a minister.

Nepali Congress's main coalition partner Communist Party of Nepal (United Marxist Leninist) said it would not join the government because Koirala failed to honor an agreement to give it the powerful Home Minister portfolio.

Koirala had secured more than two-third of votes in Parliament on Monday with the backing of the coalition partner.

Koirala will remain in office, but the development once again brings political uncertainty to Nepal.