His unexpected visit, just two days after the confirmation of his re-election despite mass street protests, had heightened tensions at the summit where delegates said Libyan leader and current AU chief Moamer Kadhafi had extended the invitation without consulting the 53-member bloc.

"It's good news," said one European diplomat observing the talks.

The planned Iranian visit had sparked debate among diplomats on how to react to a speech by Ahmadinejad at an event where Italian Prime Minister Silvio Berlusconi, who hosts the Group of Eight summit of rich nations next week, was also an invited guest.

Berlusconi told Kadhafi on Tuesday that he was cancelling his visit, due to the deadly crash of a train ferrying liquid petroleum gas that killed 14 people in Italy, the Italian government said in a statement.

The controversy over Iran had distracted from Kadhafi's intense lobbying to pressure African nations into accepting his vision for a greatly empowered AU executive, despite opposition from key countries like South Africa, the region's economic powerhouse.

Kadhafi wants to bring all the African Union's existing organs under a single federal authority, part his broader campaign for a "United States of Africa".

"I will defend this idea in the forthcoming summit, during my presidency of the AU," he insisted Tuesday.

Many countries, especially in eastern and southern Africa, favour a more gradual approach to integration and resent Kadhafi's pressure to create a more powerful AU Authority during the summit.

"The heads of state have agreed on the long-term objective of creating a United States of Africa," the top AU official Jean Ping told AFP.

"Debate has run for three years on the pace of the reforms. There are some who say it should proceed gradually and others who favour a much more rapid approach," Ping said. "We have reached a point where a decision needs to be made."

The debate has pulled the summit's spotlight away from the African Union's work in hotspots around the continent.

The AU has a 4,300-strong peacekeeping force in Somalia, where they are the only thing protecting President Sharif Sheikh Ahmed in his official quarters from an offensive launched by Islamist insurgents nearly two months ago.

An east African bloc including Somalia and five neighbours on Tuesday urged the AU to deploy an additional 4,000 troops to the peacekeeping force in the face of the latest onslaught.

The AU Peace and Security Council late Tuesday decided to lift Mauritania's suspension from the bloc, after the naming of a transitional government to steer the country toward elections on July 18.

Madagascar's ousted leader Marc Ravalomanana has come to the summit to urge stronger action to return him to power, after the opposition leader toppled him with the army's blessing in March. AU-led mediation efforts were suspended last month.

The African Union is also under pressure to drop its resistance to the international war crimes warrant for Sudanese President Omar al-Beshir, who will also be attending.

The International Criminal Court (ICC) has issued an arrest warrant for Beshir on war crimes and crimes against humanity in his country's Darfur region, but Beshir has been travelling to countries without treaty obligations to the court to rally support for a suspension of the warrant.

The summit is set to open later Wednesday, with Brazil's President Luiz Inacio Lula da Silva due to speak at the opening ceremony for the talks whose official agenda centres on finding ways to boost agriculture on the continent.