But the African force will only stay on for another three months, and the Sudanese Government is still refusing to allow up to 20,000 United Nations peacekeepers to take over.
The decision was reached at a summit meeting of the AU's 15-member Peace and Security Council (PSC) meeting on the sidelines of the UN General Assembly.
However US President George W. Bush and Egyptian President Hosni Mubarak reiterated the need for UN troops to take over from the ill-equiped African force.
Last month, the United Nations Security Council adopted a resolution calling for the deployment of up to 20,000 UN peacekeepers to replace a smaller, ill-equipped African Union force in war-torn Darfur.
But Sudan's government has opposed the deployment of the proposed UN mission.
At least 200,000 people have died in the region in the past three years in fighting and from disease and malnutrition caused by the conflict.
Khartoum welcomes extension
Sudan’s State Foreign Minister Al-Sammani al-Wasila al-Sammani told AFP by telephone late on Wednesday night said the AU extension was welcome but could have been extended even longer.
Mr Sammani said the AU mandate could have been lengthened to a further six months, “because the African troops have now got acquainted with the region and its people and their performance has been commended by the international community."
He added that he believed it was easier for the international community to help by providing financial and technical assistance to the established AU forces rather than start from scratch with other forces, such as a UN deployment.
Bush and Mubarak
A White House official, who spoke on condition of anonynimity claimed that "the president spoke to Egyptian president Mubarak earlier today about Sudan. They discussed the urgency of stopping the killing in Darfur."
"They expressed a strong commitment to effecting the transition to a UN force," the official told AFP.
Mr Bush met Mr Mubarak a day after he demanded action to override Khartoum's opposition in a speech to the UN General Assembly.
AU force set to strengthen
The PSC chairman, Burkina Faso President Blaise Campaore, said the 7,200-strong AU force, known as AMIS, would be strengthened "through contributions from Africa, logistical and material support from the UN and a commitment by the Arab League to fund the operation."
UN officials confirmed that the UN Department of Peacekeeping Operations had agreed to provide logistical support to the ill-equipped AU force as discussions continue to persuade Khartoum to accept a transition to a robust UN force.
Last March, an Arab League summit in Khartoum had pledged 150 million dollars to bolster the cash-strapped AMIS in Darfur.