* President officially quits, transition seen
* Mali's neighbours seek dialogue, say force on table (Writes through with details)
By Bate Felix and Laurent Prieur
BAMAKO/NOUAKCHOTT, April 8 (Reuters) - Mali's President Amadou Toumani Toure resigned on Sunday, paving the way for the soldiers who ousted him in a coup to stick by a deal to restore civilian rule and hand power to the president of the National Assembly.
Neighbouring states meeting to discuss turmoil in Mali's north, a major reason for the military's ousting of Toure, said they would seek dialogue with the northern rebels, a mix of Tuareg separatists and Islamists with links to al Qaeda, but warned they would consider military intervention if it failed.
The twin crises - a coup in the capital that led to a rebel seizure of vast tracts of the north - have threatened Mali's previous reputation for democracy and widened a security void that regional and Western nations fear will exacerbate regional instability, terrorism and smuggling.
Already bracing for a food crisis that is set to hit millions across the Sahel this year, over 200,000 civilians have fled their homes in northern Mali and many are short of food and healthcare as the rebel push has swept with it looting.
In a brief statement on his resignation, Toure said: "I am doing it without any pressure, I am doing it in good faith and most of all for the love that I have for this country."
A Reuters journalist at the villa where he met the mediators said Toure, who has been in hiding since his presidential palace was attacked by mutinous soldiers, was dressed in a white flowing boubou robe and matching hat, and looked relaxed after the meeting.
Djibril Bassole, Burkina Faso's foreign minister and a leading mediator for West Africa's ECOWAS bloc, confirmed the resignation and said the appropriate steps would be taken.
After three days of negotiations and growing international pressure to step down, Mali's junta announced late on Friday it would begin a handover of power in return for an amnesty from prosecution and the lifting of trade and other sanctions.
According to the agreement signed with mediators, the junta must now make way for a unity government with Mali's parliament speaker Diouncounda Traore as interim president.
It is not clear when elections, which had been due on April 29, can be held as the north is increasingly lawless and in the hands of separatist Tuareg-led MNLA rebels and Islamist fighters seeking to impose sharia, Islamic law, across Mali.
A resident in Gao, one of the three northern towns seized, said a Tuareg gunman had his throat slit on Sunday by Islamist gunmen for trying to rob a bus.
To the south, eyewitnesses said a truck loaded with 100 people fleeing the town crashed on Saturday, killing about 10.
Most aid groups have fled the area but a grouping of northerners resident in the south met on Sunday and said they planned to dispatch aid up north.
Frustrations over Toure's handling of the north are at the heart of Mali's crisis, with soldiers complaining that they were ill-equipped to fight rebels bolstered by guns and fighters returning from Libya's war last year.
Mali's neighbours have also long complained that Toure did not do enough to strengthen his grip on Mali's north.
After a day of security meetings, Mohamed Bazoum, Niger's foreign minister, said Mali's northern neighbours expected Bamako to shoulder its burden of responsibility for security in the region, an implicit dig at perceived weakness under Toure.
Bazoum said dialogue would be sought but force remained an option: "For those (groups in the north) who do not want to organise or take part in dialogue, we are convinced that what needs to be done (...) is to defeat them and to do so by the appropriate means," he said.
Mauritania, Algeria, Niger and Mali had set up a joint military command headquarters before the lightning rebel push, although it had struggled to coordinate efforts against what they see as an Islamist threat in the Sahara.
The separatist MNLA have declared an independent state of "Azawad" but they do not have any international backing or the control over large chunks of areas they claim, a zone the size of France in Mali's desert north.
They have an uneasy relationship with Ansar Dine, another Tuareg-led group that swept south but wants to impose sharia. Experts say Ansar Dine has links with al Qaeda's regional wing, AQIM, which has made millions of dollars from ransom payments for kidnapped Westerners.
Underscoring deepening confusion in the area, seven Algerian diplomats were kidnapped in Gao last week.
Algeria's El Watan newspaper reported on its website on Sunday that the diplomats had been freed, but Algerian officials in Nouakchott were unable to confirm that. (Additional reporting by Adama Diarra in Bamako; Writing by David Lewis; Editing by Myra MacDonald)