His wife Tek Kumari, who sits across from him at the fireplace, prepares a meal of lentils, goat meat and rice as her husband offers vodka-like home-brewed rakshi to the guests, who lie on straw mats stretching out their legs.

This has become a typical scene in Ghalegaun, about 100 km (60 miles) west of the Nepali capital of Kathmandu, which is now known as "the homestay village" for its part as the model for a scheme designed to lure tourists, many of whom were scared away during a decade-long conflict which ended in 2006.

"'Come as guests, go as friends' is our motto," said Gurung, 50, who lives in the stone hut that has been set up with rooms with clean beds and toilets to accommodate visitors in this hill-top village overlooking some of the world's tallest peaks.

"We live like a family sitting and eating together with the guests. We discuss even personal matters and crack jokes with them as friends," he said.

Ghalegaun, a village of 400, sits amid carved terraces growing potatoes, onion, garlic, millet, rice and corn. It is overshadowed to the north by Mount Manaslu, the world's eighth highest peak at 8,163 metres (26,781 feet).

The village, which itself is located 2,070 metres (6,790 feet) above sea level, is renowned for the culture and hospitality of the Gurung, a community that came from Tibet several centuries ago and is known as one supplier of the famed Gurkha soldiers for the British and Indian armies.

Tourists stay and eat with the locals in their homes, whose doorways are so low that anybody entering has to stoop. The prices for food and lodging are determined collectively by the villagers - a system now copied by dozens of other villages across Nepal, though Ghalegaun is the most popular.

Guests are allotted to families in a way that ensures everyone benefits. Each household earns about $150 a month, a substantial income in a country where one fourth of its 26.6 million people live on a daily income of less than a dollar.

"This is a unique opportunity to stay with locals, eat locally grown food in their kitchen and even cook meals yourself," said Shailendra Kumar Shah, who came with his family from Nuwakot near Kathmandu.

"These things are not available everywhere."

The majority of tourists are Nepali, increasingly attracted to the chance of spending time in quiet villages but were reluctant to venture away from safe places such as Kathmandu during the years of conflict.

Authorities said the government hopes other villages will be able to copy Ghalegaun and share the benefits of tourism.

"We plan to prepare guidelines setting the minimum standard families must maintain in terms of beds, cleanliness, bathrooms and kitchens for the tourists coming to stay in their homes," said Mohan Krishna Sapkota, a senior Tourism Ministry official.

UNDER HIMALAYAN SHADOWS

Ghalegaun, a village with narrow paved lanes snaking between stone walls lined by tin roofed houses, is reached after four hours of nerve-wracking driving on a dusty road carved through craggy mountains from the nearest town of Besishahar.

It sits on the fringes of Nepal's biggest conservation site - the Annapurna Conservation Area Project ACAP.L, which seeks to promote environment-friendly tourism in the area.

Project authorities support the villagers in vegetable and tea growing and construction of village trails and bridges to win their support for plans aimed at conserving rare local animals such as the snow leopard, leopard cat and musk deer.

Other attractions include the local culture. Ghalegaun was the capital of the Ghale Kings who ruled centuries ago, and at night visitors join locals in playing drums and taking part in traditional dancing in lively cultural evenings.

The return of tourists is a welcome sight in these parts of Nepal, home to eight of the world's 14 highest mountains including Mount Everest, which emerged from a decade-long civil war in 2006 - a conflict which caused more than 16,000 deaths and scared away tourists, who contribute four percent to its gross domestic product each year.

Aid-dependent Nepal earned $330 million in 2010, the most recently available data, from nearly 600,000 foreign visitors, who dominate tourism nationwide. There is no data on how much is made from domestic tourism.

In Ghalegaun, domestic visitors - reluctant to take on the trekking that foreigners enjoy - dominate. More than 11,000 visitors came to the village in 2011, only 400 of them foreign.

Visitors for their part are advised to respect the local ecology and customs.

"Don't wear revealing clothes and avoid the outward display of physical affection," a notice at the village entrance says. "Save caresses for private moments."

Some villagers, though, say those same local customs include the ugly reality of a caste system where the so-called dalits, or untouchables, remain in an inferior position even though this has been officially banned in the majority Hindu nation.

Of 115 village households, 50 are those of dalits, who do not host visitors and must endure treatment by other villagers that includes having teacups they have used purified by fire.

"This is a tradition we cannot wish away," said 45-year-old Sukman Bishwakarma, a dalit. "What can we do?"

(Reporting by Gopal Sharma; editing by Elaine Lies and Paul Casciato)

• A Permanent Economic Emergency