"The time has come that we must end the marginalisation of Africa," he said in a speech at the spectacular opening ceremony.

"We must end many centuries in which many on our globe despise the people of our continent."

The new organisation is intended to be people-orientated, in contrast to the "dictators' club" of the Organisation of African Unity (OAU) which was formally wound up on Monday.

It will also have "teeth" and proper authority, with the first task on its books the creation of a Peace and Security Council, which, in turn, will establish an African peacekeeping force.

An ultimate aim is for the organisation to have a single African parliament, court of justice and central bank, although leaders acknowledge it will be several years before they are likely to take shape.

The summit began with a dazzling launch ceremony in Durban's Absa rugby stadium, with Zulu warriors dressed in traditional costume dancing, a fighter jet flyover that streaked orange smoke across the sky and a 21-gun salute.

The Senegal football team - Africa's most successful in this year's World Cup - was also present, along with the South African national team, Bafana Bafana.

Around 25,000 people are thought to have attended, French news agency AFP reported.

'Iron will'

The union is the brainchild of Libyan leader Colonel Muammar Gaddafi, who gave a dramatic, if unscheduled speech, at the launch, where he pleaded with Africans to renounce racism and become "masters of our continent".

The formation of the AU is the beginning of hope

Jackson K George Jr, USA

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However, United Nations Secretary General Kofi Annan has urged caution, saying it will not be easy to achieve the AU's goals of economic progress and good governance.

Mr Annan said integration was the way to develop Africa's economy but said that its poor infrastructure, debt burden and many conflicts were sizeable challenges.

"To build a successful union in such conditions will require great stamina and iron political will," said Mr Annan.

He also said that Africa must solve its problems before expecting Western leaders to increase aid or forgive debts.

This is the gist of Africa's latest development plan - the New Partnership for Africa's Development (Nepad).

'Old men's club'

However, despite the celebrations controversy remains over several issues, notably where the AU should be based.

Colonel Gaddafi wants the AU headquarters to be in Libya but it seems likely to be in the Ethiopian capital of Addis Ababa - like the OAU.

And while the AU is intended to promote good governance, there has been criticism of the leaders' acceptance of Robert Mugabe, a more controversial attendee of the AU's launch ceremony.

Outgoing OAU chairman, Levy Mwanawasa had pointed to the controversial elections in Zimbabwe as a sign of the spread of democracy across Africa.

However Mr Mwanawasa's own election last December was also criticised by the opposition and the European Union.