The coup last month has caused alarm among Western allies and democratic African states who fear it could allow Islamist groups active in the Sahel region to expand their reach, and give Russia a foothold to increase its influence.
The Economic Community of West African States (ECOWAS) has been trying to negotiate with the junta but says it is ready to send troops into Niger to restore constitutional order if diplomatic efforts fail.
The AU Peace and Security Council said in a communique on Tuesday that it had noted the decision to activate an ECOWAS standby force and asked the AU Commission to assess the economic, social, and security implications of deploying such a force.
The resolutions in Tuesday's statement were adopted at a council meeting held on Aug. 14, it said.
It reiterated calls for the coup leaders to immediately release elected President Mohamed Bazoum, who has been detained since the coup, and return to their barracks.
The coup leaders have so far resisted pressure to step down and proposed a three-year timeline to organise elections, a plan which ECOWAS said on Monday it outright rejected.
The AU also said it strongly rejected any external interference in the situation by any actor or country outside of Africa, including engagements by private military companies - a likely reference to Russian mercenary group Wagner, which is active in neighbouring Mali.
(Reporting by Nellie Peyton; Editing by Alexander Winning and Angus MacSwan)
A supporter of the military junta displays a sign that reads 'United youth for a prosperous Niger, French (military) bases must go' during a protest against a potential military intervention in Niamey, Niger, 20 August 2023. The coup leader, General Abdourahmane Tchiani, warned against a military intervention after the ECOWAS leaders said they were ready to go and reinstall democratically elected Niger President Mohamed Bazoum. EPA-EFE/ISSIFOU DJIBO 