It took the warring sides almost four weeks of talks in the Nigerian capital, Abuja, to agree on the document, after progress was slowed by splits within the two rebel groups and arguments over the presence of Chad and Eritrea as mediators.
"By adopting the Declaration of Principles, you have demonstrated your own determination that you will not let down the people of Darfur," Salim Ahmed Salim, the chief AU mediator, said at the signing ceremony on Tuesday which ended the fifth round of peace talks.
The AU is battling to hammer out a deal that would end the war in Darfur, which erupted in February 2003 and pits Sudanese government troops and Arab militias against rebels fighting to end what they call the neglect and oppression of the region's inhabitants.
This week's declaration calls for new security arrangements to be put in place and for some 200,000 refugees camping out in neighbouring Chad and the 1.9 million Darfuris displaced within Sudan to return to their home villages.
The document also says there should be respect for different ethnic and religious groups across Sudan, as well as an equitable distribution of national wealth.
"A federal system of government with an effective devolution of power and clear distribution of responsibilities between the national and other levels of governance is considered essential for ensuring effective local participation and for administration of Sudan in general, and Darfur in particular," the declaration also said.
Four previous rounds of talks in Abuja had ended in stalemate, and while this fifth round produced the declaration of principles, it failed to deal with the nitty-gritty of bringing peace to this semi-desert region the size of France.
"(These) principles... shall guide our future deliberations and constitute the basis for a just, comprehensive and durable settlement of the conflict in Darfur," the document said.
Mediators said the Sudanese government and the two rebel groups -- the Sudanese Liberation Army (SLA) and the Justice and Equality Movement (JEM) -- would meet again in Abuja for more negotiations starting on 24 August.
All three parties to the talks hailed the three-page declaration on Tuesday as a crucial step forward in the conflict that has killed an estimated 180,000 people and forced more than two million to flee their homes.
"We are sure this march will continue until peace is achieved in Darfur," Mahjoub al Khalifa, who headed the Khartoum delegation, told reporters in Abuja. "We reaffirm our commitment and will to pursue dialogue."
Abdel Wahed Mohamed al-Nur, the lead negotiator for the SLA, expressed optimism the deal will speed up the attainment of a lasting peace deal and called on the Sudanese government to "be as serious as we are."
But the smaller JEM group warned that the commitments on paper must be heeded to in practice.
"The signing of this document is a step forward. Nonetheless, it is not worth the ink with which it is signed unless people abide by it," said Ahmed Tugod Lissan of JEM.
Some factions of both the SLA and JEM said during the latest round of talks that the delegates in Abuja did not represent the fighters on the ground and that any deal agreed there was worthless.
But negotiators for the two rebel groups have insisted they have the requisite mandate and that their decisions will be accepted in the field.