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Unlnown to many, a war of terror is being waged in the remote mountains of Nepal, shattering the Himalayan kingdom's customary tranquillity and threatening to destroy its tourist lifeline. Self-styled Maoist guerrillas, with links to Peru's Sendero Luminoso (SL) or Shining Path, have launched a campaign of brutal murders and attacks on government installations from the country's far western jungles, in an attempt to overthrow Nepal's monarchy and replace the government with a Maoist regime.

The so-called "People's War" - which unnervingly resembles the Shining Path's failed 1980s campaign in the Andes - and attempts by police paramilitaries to combat it, have plunged much of the country into an unprecedented spiral of violence and terrorized villagers in the poorest regions of Nepal. Entering villages in the dead of night, black-hooded men, wearing red headbands and chanting Maoist slogans, have singled out their victims - usually local bureaucrats or government supporters. They often murder them with their bare hands, dismembering them with kukris, the traditional Nepali knife, or smashing their hands and legs with hammers and rocks, leaving them barely alive.

Elsewhere, the guerrillas have bombed police stations, burned local banks and disconnected power and telephone lines. They have also targeted foreign aid agencies. In November, two vehicles belonging to the United States' Save the Children Fund were burned by suspected Maoists in Nepal's southern Terai region. In May, a Nepali worker for USAID, the American government's overseas development wing, was ambushed in his jeep and killed.

As many as 600 people are believed to have been killed in terrorist attacks and police reprisals since the Maoists began their campaign almost three years ago. In the past few months, since the guerrillas began the "Fourth Stage" of their war - an attempt to establish Maoist-controlled areas of the country - more than 80 people have been killed and the insurgency has spread from four areas to about half of Nepal's 75 districts. The level and brutality of the killings and the subsequent police crackdown has alarmed Western observers, who fear that it may not be long before tourists are attacked.

The Nepalese government, which relies on tourism as a primary source of foreign exchange - the tourist industry brings in about US$90 million a year and about 500,000 tourists are expected to visit by the end of the year - has placed four Western districts of the country off-limits to travelers. Embassies have issued advisory notices to their nationals to avoid certain parts of the country. But despite almost daily reports of terrorist attacks, the Maoists themselves remain obscure. Described by one human rights worker as "emerging suddenly, from nowhere", little is known of their strength or their membership - although it is believed to comprise mainly of poor peasants and possibly a number of former Nepalese army soldiers. Inquiries after them, in the remote villages where they operate, have invariably met with closed doors and silent stares.

However the roots of the movement are believed to be Nepal's intractable poverty. Almost half of the population now live in poverty, in villages where basic medical supplies such as aspirin are unavailable, and there is increasing disenchantment with Nepal's corrupt and fractious politicians, who have produced five governments in four years.

The Maoists' Web site, which displays long tracts of rhetoric on "class struggle" by their leader, Dr Baburam Bhattarai, a Nepali intellectual, expresses this disenchantment. It declares their aim of overthrowing the government, abolishing the monarchy and turning Nepal into a "Red fort", with a "hammer and sickle flag hoisted atop Mount Everest". It also reveals links with a worldwide network of Communist groups, notably the Shining Path, on which they appear to have modeled themselves. Organized cells of Maoist cadres, described as well-trained and disciplined, are believed to have training camps in the forests of Nepal's western foothills, and to be supported by villagers in the poorest regions who have long-standing Communist sympathies. In Nepal's first election in 1991, the Maoists, who have not run since, won seven seats.

But although they are suspected of raising money through extortion from several hundred thousand Nepalis living in India, the exact source of their funding and extent of their foreign support remains unclear.

About three years ago a North Korean sealed diplomatic container containing weapons, telecommunications equipment, timing devices and gold was intercepted by Nepali customs on the Indian-Nepal border. In a subsequent incident about a year ago, Nepal customs opened a North Korean diplomatic pouch also containing gold bullion. Both incidents were swiftly hushed up and the motive and eventual destination of the shipments were never discovered.

One Western observer said, "There are any number of bad guys passing through Nepal. Those shipments need not necessarily have been for the Maoists. They could have been for anyone."

So far, the guerrillas have used mainly crude homemade weapons and gelignite bombs or rifles stolen from villagers or the police, and the insurgency is still believed to be in its early stages. Recently, Kathmandu police found a quantity of plastic explosives and timing devices in a hotel room in the capital, suspected of being for the Maoists.