The AU has suspended the Central African Republic after rebels seized power in a rapid weekend assault on the capital, sending the president fleeing.
Rebel leader Michel Djotodia planned to declare himself president on Monday after his Seleka coalition took control of Bangui in the wake of the collapse of a two-month-old peace deal with Bozize's regime.
But the African Union (AU) took swift action on Monday amid international concern about the deteriorating security situation in the deeply unstable former French colony.
"The council has decided to suspend with immediate effect Central African Republic from all African Union activities and to impose sanctions, travel restrictions and an asset freeze on Seleka's leaders," said AU peace and security chief Ramtane Lamamra.
South Africa said 13 of its soldiers were killed and 27 wounded in the weekend fighting in Bangui and condemned the rebel offensive.
"As a member of the African Union, South Africa rejects any efforts to seize power by force," President Jacob Zuma told reporters, adding however that there were no immediate plans to withdraw troops helping the weak national army.
Djotodia, a former civil servant turned rebel leader, said on Sunday he would declare himself president but told Radio France Internationale the rebels would respect the terms of a January peace deal and would hold free and fair elections within three years.
Opposition figure Nicolas Tiangaye, appointed prime minister of a national unity government formed as part of the accord that ended a previous Seleka offensive launched late last year, would remain in the post, he said.
President flees Bangui
President Francois Bozize, who himself seized power in a coup in 2003, is said to have fled the Central African Republic but his whereabouts remain a mystery.
One well-placed source told Agence France-Presse that he had left the country in a helicopter, but did not disclose his destination. French Foreign Minister Laurent Fabius confirmed only that he had fled Bangui.
About 20 members of Bozize's family were taken to the neighbouring Democratic Republic of Congo, government spokesperson Lambert Mende told AFP, but said the ousted leader was not on its soil.
Djotodia said he may keep some ministers from Bozize's clan in his government, pledging: "We are not here to carry out a witch hunt."
Bangui residents initially welcomed the rebels, waving palm leaves in celebration but the optimistic atmosphere quickly soured into anxiety as gangs of armed looters roamed the riverside city, pillaging shops and offices including the premises of the UN children's agency Unicef.
And the international community has expressed concern over the situation in the country, which remains one of the poorest nations on earth although it has largely untapped mineral wealth including uranium, gold and diamonds.
The US state department said on Sunday it was "very concerned by the worsening humanitarian situation in CAR and credible, widespread reports of human rights abuses by both national security forces and Seleka fighters".
It also called for rebels to restore electricity and water to the capital which had been interrupted over the weekend.
UN secretary general Ban Ki-moon also condemned the seizure of power by Seleka – a loose alliance of three rebel movements – calling for "the swift restoration of constitutional order".
French President Francois Hollande called on all parties to form a government in accordance with the January peace deal hammered out in the Gabonese capital Libreville, and asked "the armed groups to respect the population", thousands of whom have already fled Bangui.
Rebel fighters resumed hostilities last week after they accused Bozize of reneging on the terms of the January deal which aimed to put an end to a previous offensive launched by Seleka in December.
The accord brought several prominent figures from Seleka into the government but it collapsed after the rebels said their demands, which included the release of people they described as political prisoners, had not been met.
Seleka launched its first offensive on December 10, accusing Bozize of having failed to honour an earlier peace agreement. They seized a string of towns on their way south but stopped short of Bangui.
The state, which has a population of about 4.5-million, has been unstable since its independence from France in 1960, with a history of coups and mutinees. – Sapa-AFP