Nepal's former deputy prime minister, Bharat Mohan Adhikari, is the most prominent political detainee to be freed from house arrest.
His release - along with that of at least 59 others - came hours after human rights group Amnesty International accused the new administration of detaining more than 3,000 political prisoners since King Gyanendra fired the government and imposed an emergency on February 1.
Amnesty says the detainees include political activists, journalists and human rights defenders. It says they are being held with the apparent aim of preventing protest against the king's takeover.
In New Delhi, the head of the Asia Center for Human Rights, Suhas Chakma, says most top leaders of political parties have been released under international pressure, but many lower-level politicians are still imprisoned.
He says this is crippling efforts by political parties to launch a pro-democracy campaign in the country.
"Middle-level, district level political leaders across Nepal have been arrested, and put under detention," said Suhas Chakma. "So the whole political movement in Nepal by the democratic forces has collapsed because there are no activists at the district level."
The Amnesty International report also says violence has escalated under the king's rule and grave human rights abuses are being committed by both the Army and Maoist rebels. It says legal safeguards against such abuses have virtually collapsed, and accuses authorities of torturing prisoners.
King Gyanendra has stated he assumed direct power to end the 10-year raging Maoist insurgency which has killed thousands and to end political infighting paralyzing the country.