Despite the move, there were conflicting reports yesterday suggesting guides will refuse to work. Expedition leaders said tension was running high at Everest base camp after last Friday's incident, which has rekindled debate on the disproportionate risks that sherpas take helping foreign mountaineers reach the 29,029-feet summit.
Ang Tshering Sherpa, president of the Nepal Mountaineering Association, said that although some sherpas had proposed suspending work for the rest of this climbing season, they had now agreed to resume expeditions on Saturday.
But an American climber at base camp said the sherpas had voted to head down and were packing up.
"The ice doctors who set the routes say the current route is too dangerous and there are no alternative routes," said Ed Marzec in an email passed on by a colleague.
"In addition, the famous Lama Geshe told his people that they should not go to the summit because more will die," Marzec added, referring to the revered Buddhist guru who gives his blessing to Everest climbers.
Several expeditions have already been called off, including a Discovery Channel climb to launch a stunt man from the summit in a wing suit.
The government said the minimum insurance cover for sherpas on Everest would be raised by 50% to about $15,000 (£9000) and it would establish a relief fund for the welfare of bereaved families and pay for the education of their children.
"We will also take steps to prevent such incidents in the future," Tourism Minister Bhim Acharya said.
In addition to the 13 sherpas killed on the Khumbu Icefall, one of the most dangerous parts of the climb to Everest, three are missing and at least three more are being treated for serious injuries.
The men were trying to fix ropes and crack snow and ice to carve out a route for foreign climbers through the icefall, located not far above Everest Base Camp, when they were caught in the avalanche. The government initially announced a payment of $400 (£240) to the victims' families to cover funeral costs. After a meeting at base camp on Sunday, sherpas with 31 expeditions demanded $10,000 (£6000) in compensation for the families of victims and a doubling of insurance cover for climbs, and they agreed to launch protests if their demands were not met.
Until now there has been no provision for government compensation for sherpas hired by international expeditions to carry gears.
Five of 40 sherpas in an expedition organised by hiking group Alpine Ascents were killed.
"It's horrible," said Vern Tejas, a 61-year-old senior guide for the Seattle-based firm. He said sherpas expose themselves to far more risk than their clients.
Guiding foreign climbers is the main livelihood for sherpas, helping them make up to $7,000 (£4200) a year in a country with an average annual income of $700 (£420).