AU ready to recognise Libya's rebels-SAfrica source

(Repeating)

* African Union also wants both sides to be part of transition

* AU backing would boost standing of rebel group

* AU members have longtime ties to Gaddafi

By Wendell Roelf

CAPE TOWN, Aug 26 (Reuters) - The African Union could recognise rebels who ousted Muammar Gaddafi as Libya's legitimate government as early as Friday, although the AU may also want some from Gaddafi's side involved in a transition, a senior South African government source said.

AU backing of Libya's National Transitional Council (NTC), which has declared itself the sole legitimate representative of the Libyan people, would bolster a group already recognised by more than 40 countries as the governing body of Libya.

"There is a strong likelihood that the African Union will recognise the NTC today but call for inclusion of the Gaddafi regime in the interim transitional government," the South African government source says.

The AU's Peace and Security Council was due to meet in Ethiopia on Friday to discuss Libya. Gaddafi was one of the main driving forces behind the creation of the AU, which consists of 54 African countries.