Despite more than a year of negotiations, the government and the rebel groups have continued fighting in Sudan's western Darfur region.
So far, the violence has led to more than 180,000 deaths and forced another 2 million to flee their homes.
An April 2004 ceasefire has been repeatedly violated.
"The continued senseless killings of innocent civilians ... the attacks on humanitarian workers must stop," AU chief mediator Salim Ahmad Salim said in opening the seventh round of talks in Nigeria's capital Abuja on Tuesday.
He called on the warring parties to work with "dogged determination to arrive at an agreement".
"The situation in Darfur is deteriorating. All efforts are being made to have a permanent ceasefire," AU mediator Sam Ibok said on the sidelines of the talks.
No time limit has been set for the negotiations, which could continue beyond December, Ibok said.
The seventh round will attempt to forge a consensus on how to run Darfur over the long-term, focusing on power-sharing and wealth-sharing between Darfur's inhabitants and the federal government in Khartoum, Ibok said.
The disarmament of rebels will
be under discussion
Ibok said there would also be discussions over security arrangements, including thorny issues such as the disarmament of rebels and militia groups.
"We are hoping that this ... will be a decisive session for the resolution of the conflict in Darfur," said Ahmad Tugud, leader of a delegation of the smaller of the two rebel groups, the Justice and Equality Movement.
Majdhub al-Khalifa, head of the Sudanese government team, said he "has come to this round for a lasting peace in Sudan' and that he was "sure and confident" it would be successful.
A split in the larger rebel group, the Sudanese Liberation Movement, has been blamed for an upsurge in violence in Darfur and had proved an obstacle during the last round of AU-mediated talks, which ended in October.
Both factions resolved at a meeting in Chad over the weekend to attend the talks with one common negotiating platform.
"We are hoping that this ... will be a decisive session for the resolution of the conflict in Darfur"
Leader of Justice and Equality Movement
But both factions' leaders - Minni Minnawi and Abd al-Wahid Nur - were in Abuja for the talks.
Earlier this month, Minnawi organised a congress at which he was elected president, removing Nur as chairman. Since then, both have claimed leadership.
US, UN, European and AU officials have pressed the factions to resolve their differences, saying they are undermining the peace process and risk losing international credibility and support.
After decades of low-level tribal clashes over land and water in Darfur, rebels from ethnic African tribes launched a large-scale conflict in early 2003, accusing the central government of neglect.
The central government is accused of responding by unleashing militias known as Janjawid to murder and rape civilians and lay waste to villages. The central government denies links to the Janjawid.