AU spokesman Adam Thiam said on Saturday negotiations would occur in Addis Ababa, where the AU headquarters is situated.
"The peace talks between the Darfur rebels and [Sudanese] government will take place on 23 August in Abuja under the auspices of the current AU chairperson [Nigerian President Olusegun] Obasanjo," Thiam said.
"The rebels have confirmed to the chairperson that they will be represented at the highest level in their leadership [and the] government has also agreed to send a high-level delegation to participate in the peace talks," he added.
An earlier AU effort to persuade the rebels to engage in direct political negotiations failed in mid-July when the two rebel groups, the Sudan Liberation Movement (SLM) and the Justice and Equality Movement (JEM), walked out insisting that their conditions be first met prior to any negotiations.
They demanded the Sudanese government should first disarm and prosecute the Janjawid before engaging in negotiations.
The Sudanese government, however, stated it had been prepared to negotiate on more than one occasion.
The Khartoum government also called on the rebels to reciprocate and disarm and be willing to face prosecution for crimes on their part, before setting demands for others.
Rebels are accused of using
Janjawid tactics to raid villages
Sudanese officials have in recent weeks indicated that the rebels are also to blame for many "atrocities" committed in the name of the Janjawid, where rebel fighters posed as Janjawid and used Janjawid signature tactics to raid outlying villages.
The government has also accused media agencies of wrongfully reporting the Darfur crisis as a racially-motivated issue between Arabs and Africans.
Government officials also said the US and its allies were targeting the African state because of its positions on Iraq and Israel.
They have also warned the International community against any military intervention.
The UN says the conflict in Darfur has created the world's worst humanitarian crisis.