Nepal police fired rubber bullets and tear gas on Sunday as hundreds protested against a $500-million US grant going before parliament that has become a bone of contention between China and the United States.

Nepal signed the Millennium Challenge Corporation (MCC) pact in 2017 to fund infrastructure projects but its ratification has been in limbo because of divisions within political parties, including the ruling coalition.

Several people were injured in the latest day of angry demonstrations outside parliament as the government put the bill before lawmakers ahead of a deadline of February 28 to pass it.

"Although they agreed to present the agreement in the parliament, it's still not clear whether all coalition partners will cast their vote in favour... Our efforts will continue to convince them," Prakash Sharan Mahat, spokesperson for the ruling Nepali Congress party, told AFP.

There is major opposition from Prime Minister Sher Bahadur Deuba's coalition partners including Maoist politicians -- seen as traditionally close to China -- who say it undermines Nepal's sovereignty.

Indian daily the Hindustan Times reported on Tuesday that Washington believes China is behind a disinformation campaign against the pact.

According to Nepali media, US Assistant Secretary of State for South and Central Asian Affairs Donald Lu recently held separate telephone conversations with Nepali politicians, urging them to endorse the MCC pact by February 28 or Washington would "review its ties with Nepal".

Days later Chinese foreign ministry spokesman Wang Wenbin said such development cooperation should "come with no strings attached".

"We oppose coercive diplomacy and actions that pursue selfish agendas at the expense of Nepal's sovereignty and interests," he told a regular briefing in Beijing.

The MCC, created by the US Congress in 2004, offers large grants to support economic growth and reduce poverty, according to Washington.

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