Both Tsvangirai's Movement for Democratic Change and the ruling ZANU-PF party of President Robert Mugabe are under strong African and world pressure to negotiate after the widely condemned re-election of Mugabe last month.

The two sides began preliminary talks under South African mediation last week.

MDC spokesman Nqobizita Mlilo said Tsvangirai had refused to sign an initial memorandum of understanding.

"Yes (Tsvangirai refused to sign). We won't have people putting it on our heads that we have to sign an agreement when our demands have not been met," Mlilo said.

The MDC has set several conditions for talks, including the end of government-backed violence it says has killed 113 of its supporters and the acceptance of Tsvangirai's victory in the first round of the presidential vote on March 29.

Tsvangirai, who fell short of an absolute majority, pulled out of the run-off citing violence against his party.

Mlilo said the MDC now awaited the result of a meeting between South African President Thabo Mbeki and the African Union's top permanent official, Jean Ping, on Friday.

"We want to see the outcome of the meeting between Mr Ping and President Mbeki tomorrow and then we will take it from there," Mlilo said.

Mbeki was appointed by regional grouping SADC last year to mediate in the Zimbabwe crisis, which has ruined a once prosperous economy and flooded neighbouring nations with millions of refugees.

Critics say Mbeki's discreet diplomatic approach favours Mugabe and has been ineffective. The MDC wants an AU envoy appointed.

BLOODSHED

Mugabe, 84, and in power since independence from Britain in 1980, has blamed the opposition for the bloodshed.

The AU has urged both sides to negotiate a power-sharing deal that would pave the way for a unity government, seen by many African leaders as the only way to avert further violence and total economic collapse.

Zimbabwe has the world's highest inflation rate, officially 2.2 million percent but estimated to be much higher by analysts.

Unemployment is around 80 percent.

Tsvangirai has come under African pressure to enter full-blown negotiations with Mugabe, who has branded the MDC puppets of the West and vowed to never let them take power.

The talks face a huge obstacle in the insistence of both sides that they should lead a unity government.

U.S. President George W. Bush said on Wednesday he wanted a peaceful end to political turmoil in Zimbabwe and was examining more U.S. sanctions after a United Nations resolution was blocked by Russia and China.