The tiny Himalayan nation was isolated from the rest of the world Wednesday, with telephone and Internet lines cut and flights diverted. Civil liberties also have been severely curtailed.
The United Nations, Britain, India and the United States were among those who criticized the king's actions. Australia advised its citizens not to travel to Nepal.
It was the second time in three years the king has taken control of the South Asian constitutional monarchy, a throwback to the era of absolute power enjoyed by monarchs before King Birendra, Gyanendra's elder brother, introduced democracy in 1990.
Gyanendra denied Tuesday's takeover was a coup, although soldiers surrounded the houses of Prime Minister Sher Bahadur Deuba and other government leaders.
The king also suspended several provisions of the constitution, including freedom of the press, speech and expression, peaceful assembly, the right to privacy, and the right against preventive detention, according to a statement from the Narayanhiti Palace.
U.N. Secretary-General Kofi Annan called the king's actions "a serious setback for the country" that would bring neither lasting peace nor stability to Nepal, U.N. spokesman Fred Eckhard said in New York.
"Steps should be taken immediately to restore democratic freedoms and institutions," he was quoted as saying.
Britain expressed similar concerns and Australia warned its citizens against traveling to Nepal, saying government-imposed curfews could be called at short notice and that violators risked being shot.
The United States called the developments a "step back from democracy," said State Department spokesman Richard Boucher, adding that they also undermine the Nepalis' struggle with the Maoist insurgency.
In an announcement on state-run television, the king accused the government of failing to conduct parliamentary elections and to restore peace in the country beset by rebel violence.
He said a new Cabinet would be formed under his leadership, and that peace and democracy would be restored within three years. Later, state-run television reported a state of emergency had been declared.
"These developments constitute a serious setback to the cause of democracy in Nepal and cannot but be a cause of grave concern" to India — Nepal's southern neighbor, India's foreign ministry said.
The king fired Deuba as prime minister in 2002, sparking mass protests demanding the restoration of a democratically elected government. He reinstated Deuba last year with the task of holding elections by next month and conducting peace talks with Maoist rebels.
Nepal has been in turmoil since Gyanendra, 55, suddenly assumed the crown in 2001 after his brother, Birendra, was gunned down in a palace massacre apparently committed by Birendra's son, the crown prince, who also died. In all, 10 members of the royal family were killed.
Riots shook Katmandu after the killings. Soon after, fighting intensified between government forces and the rebels, who control large parts of Nepal's countryside.
The rebels have been trying since 1996 to overthrow the government and establish a socialist state. More than 10,500 people have died since the fighting began.
By Binaj Gurubacharya