Nepal's former chief justice Sushila Karki is likely to be appointed as head of a caretaker government, which would conduct fresh elections, addressing the demands of the agitating group, according to sources.
Talks among various stakeholders, including representatives of the Gen Z group -- which spearheaded the anti-government protests -- the army chief, and President Ramchandra Paudel, ended inconclusively at Thursday midnight.
The youth-led Gen Z group proposed Karki's name for the post of prime minister, multiple sources said.
President Paudel is expected to appoint Karki as Nepal's first female prime minister on Friday morning.
The president is holding consultations with various political leaders as well as constitutional experts to find a way out of the current political impasse, according to sources close to Paudel.
Two options were considered for forming the new government: Dissolving parliament or retaining it. However, the agitating group has agreed to seek a solution within the constitutional framework.
Meanwhile, the overnight curfew has been relaxed for four hours from 7 am to 11 am to allow people time to ease into daily life.
Restrictive orders will be in place across the country from 11 am to 5 pm, followed by a two-hour window before curfew resumes from 7 pm to 6 am the next day.
K P Sharma Oli quit on Tuesday as prime minister shortly after hundreds of agitators entered his office demanding his resignation for the death of at least 19 people in police action during Monday's protests over corruption and a social media ban.
The ban on social media was lifted on Monday night.
President Paudel accepted Oli's resignation but stated that the cabinet will continue to run the government until a new council of ministers is formed.
According to Nepal's health ministry, the number of people killed so far during the protests on Monday and Tuesday has risen to 34.