The British Embassy in Kathmandu, while making public the new British national security strategy and a strategic defence and security review, categorically said: "The government has no plans to disband Gurkha units."
The denial comes after the British media reported a furore triggered by former British Army officer and Conservative MP Patrick Mercer's comments that an upsurge in recruitment in Britain had made the soldiers from Nepal redundant.
"The great benefit the Gurkhas had in the past was twofold," the Daily Express quoted the MP as saying last month. "They were cheap, much cheaper than the British equivalent, and they were plentiful. Well, now they are not so cheap and British recruiting has never been higher."
The Express also speculated that if not axed completely, the 3,400-strong Brigade of Gurkhas could be slashed to 2,500 "as planned under the previous defence review".
The buzz about the British Army thinking of jettisoning its legendary mountain fighters began to grow last year after the British government decided that all former Gurkhas who had served for at least four years would be eligible for settlement in the UK.
It was feared that the decision could cause an exodus of nearly half a million Gurkhas and their dependants to Britain, thereby putting great pressure on the state coffers and especially healthcare.
The British government's dismissal of the speculation comes after the chief of Nepal Army, Gen Chhatraman Singh Gurung, visited Britain this month at the invitation of his British counterpart, Gen Peter Wall and the Gurkhas figured among "matters of mutual interest" that were discussed between the two generals.
Gen Gurung also visited the 2nd Royal Gurkha Rifles Battalion, which is on specialist training prior to deployment in Afghanistan in spring 2011.
The Gurkhas, who have fought in the British Army for nearly two centuries, are deployed in some of the worst hot spots in the world, including Iraq and Afghanistan.
At least four Gurkha soldiers were killed in Afghanistan this summer alone.
Though Nepal's biggest party, the Maoists, had earlier threatened to stop Gurkha recruitments, they had to drop the threat after strong protests by the Gurkhas.
Despite the end of the decade-old Maoist insurgency four years ago, Nepal still remains engulfed in political turmoil and every year, hundreds of young boys from the mountains queue up to try their luck with the British and Indian Army.