The curfew will be effective in Atmara to the east, Bihibare to the west, School Danda to the north and Ghumaune Chautara to the south.
The decision was taken after a day-long effort to reconcile the two parties failed, Chief District Officer Kali Prasad Parajuli said.
The Maoist cadres on Monday had declared Dhankuta a Limbuwan Autonomous province. Earlier, the Maoists had seized the keys of the municipality office and evicted government officials.
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