South Africa's Sunday Times said Madikizela-Mandela will urge Mbeki and bitter rival Jacob Zuma to set aside their leadership bids for the sake of party unity, the paper said.
Under her proposal, the two would remain in their current ANC posts -- Mbeki as president and Zuma as deputy president -- after the party's national conference later this month and agree to step down within five years, according to the paper.
"Both should commit to hand over the reins in time and to facilitate a change of guard in the next five years to the next generation of leaders -- of which the ANC is not short," it quoted her as saying, adding that she hoped to meet Mbeki and Zuma in the coming week.
Madikizela-Mandela remains influential in the ANC despite a 1991 kidnapping and accessory to assault conviction, and her subsequent divorce from Mandela.
The anti-apartheid heroine, who rose to legendary status within the ANC while her then-husband languished in jail, has been nominated for the ANC's National Executive Committee, its top decision-making body.
She told the paper she was intervening at the request of ANC veterans and activists and out of fears the party faced a "catastrophic" split as a result of the infighting between Mbeki and Zuma and their supporters.
The acrimony between the two camps has intensified since Mbeki fired Zuma as the country's deputy president in 2005 amid a corruption scandal and is now building to a fever pitch as the party prepares for its December 16-20 leadership conference.
Both sides have accused the other of dirty tricks, including attempts to buy the support of some of the more than 4,000 ANC delegates who will cast ballots at the congress in Polokwane, about 350 km (219 miles) north of Johannesburg.
It is, however, unclear why Zuma, who is reportedly well ahead of Mbeki in the delegate count heading into the vote, would accept a proposal that would see him surrender his long campaign to wrest control of the ANC from his former boss.
The ANC's electoral dominance virtually guarantees that Zuma, if elected leader, would become the country's president in 2009 when Mbeki is constitutionally required to step down.
Mbeki, who has seen his bid for a third term as ANC leader unravel at the grassroots level where there is growing disenchantment over what is seen as an autocratic style and business-friendly policies, would be the clear beneficiary of any such deal.
A South African political activist meanwhile said he would bring his legal battle to halt the ANC leadership conference to the Supreme Court of Appeal after failing to get a lower court to intervene in the matter.
"We will approach, on an urgent basis, the Supreme Court of Appeal for assistance," Votani Majola, an ANC member in the Johannesburg area, said in a statement released to the South African Press Association.
A Johannesburg High Court on Friday refused to grant Majola's request to have the ANC congress postponed for six months. He had argued it was necessary because party infighting had made it impossible to hold the five-day event.
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