Former UN chief Kofi Annan said on Thursday that Kenya's rival leaders had agreed to form a coalition government to end the country's political crisis.

"We have come to an understanding on the coalition agreement. We do have an agreement," Annan, who mediated talks between President Mwai Kibaki and opposition leader Raila Odinga, told reporters.

The two leaders were to sign a document formalising the deal later in the afternoon.

Annan's announcement came after crisis talks with Kibaki and Odinga that were also attended by African Union chief Jakaya Kikwete, the president of Tanzania.

On Tuesday, Annan had suspended talks between government and opposition negotiators after they failed to agree on a power-sharing deal to resolve the crisis that erupted after Odinga accused Kibaki of rigging December presidential elections.

Ensuing political rioting and tribal fighting killed at least 1500 people and displaced hundreds of thousands.

The main issue that had divided two sides appears to be how much power a future prime minister would be granted in a nation that provides constitutionally for strong presidential rule.

AFP

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