Announcing the move after a meeting of the AU Peace and Security Council in Addis Ababa, Mauritanian President Mohamed Ould Abdel Aziz said the panel’s make-up would be decided within 48 hours.
Mauritania currently chairs Peace and Security Council. Abdel Aziz said there would be five heads of state on the panel, one from each region, and that he would act as chair.
"This panel will deliver its conclusions within a month and its decisions will be binding for all the Ivorian parties," he said, adding that an African problem required an African solution.
The world's top cocoa grower has been paralysed by a power struggle stand-off following November’s presidential election.
UN-certified results declared opposition candidate Alassane Ouattara the winner, but they were overturned by the Constitutional Council, with incumbent Laurent Gbagbo refusing to step down.
The AU Peace and Security Council also demanded the immediate lifting of the blocade around the lagoon-side Golf Hotel from where Ouattara is running his parallel government.
"We are not changing the negotiations, but expanding the framework in order to find a negotiated settlement," said Jean Ping, chairman of the AU Commission after more than four hours of negotiations that included the leaders of Nigeria, South Africa, Zimbabwe and Mauritania.
"This summit must send a strong and unequivocal message that the two parties must negotiate face-to-face," said Kenyan Prime Minister Raila Odinga, who is also AU mediator in the crisis, before presenting a report on Côte d'Ivoire.
Odinga failed to make a breakthrough during two visits to the West African country this month.
The political crisis has sparked fears of renewed conflict in Côte d'Ivoire, with a ban on cocoa exports ordered by Ouattara this week pushing futures to one-year highs.