The general's sacking has sparked unrest in the country
A key ally of Nepal's Maoist-led government has withdrawn from the governing coalition in protest at the dismissal of the army chief.
The Communist UML party withdrew after Gen Rookmangud Katawal was sacked for defying government orders to integrate former rebel fighters into the army.
He was sacked during a special cabinet meeting which saw other parties protest by walking out.
The withdrawal leaves the Maoists with only a slender parliamentary majority.
Correspondents say the row could undermine the peace process which ended the civil war in 2006.
Anti-government protests were staged after the general's sacking
Communist UML general secretary Ishwar Pokharel said: "The party has decided to leave the coalition and withdraw support to the Maoists."
The government wants to integrate former Maoist rebel fighters into the army, and accused Gen Katawal of defying government orders to stop hiring new recruits and to get rid of eight generals.
The army chief has been refusing to integrate former Maoist fighters that he views as politically indoctrinated.
The Maoists fought the army for more than a decade before giving up their armed revolt, and the relationship between the two sides has been tense since the former rebels came into power last year.
Thirteen-thousand people died in the conflict.
The Nepalese army fought Maoists rebels for more than a decade
In March, the Nepalese Supreme Court ordered the defence ministry to put on hold its decision to retire the eight generals from the army.
Several coalition representatives walked out of the cabinet meeting in protest at the proposed sacking, but a vote went ahead.
"We have been insisting that the decision on the army chief should be taken through consensus among all political parties but the prime minister decided to ignore us," said Deputy Prime Minister Bamdev Gautam, according to the Associated Press news agency.
Gen Katawal was due to retire in four months.
The army's second-in-command, Kul Bahadur Khadka, has been appointed acting army chief, the deputy PM said.
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