By Barry Moody and Pascal Fletcher

ACCRA, July 3 (Reuters) - African leaders struggled on Tuesday to avoid a damaging split over moves to unite the continent under one federal government.

As a three-day African Union summit neared its close, positions still seemed wide apart. The leaders were seeking consensus after threats from the pro-unity group to break away and go it alone.

While almost all the 53 member nations agree with the goal of African economic integration and eventual unity, most of the summit leaders want this to be a gradual process.

Libyan leader Muammar Gaddafi and Senegal's Abdoulaye Wade lead a more radical group pushing for the immediate creation of a federal state stretching from the Cape to Cairo.

"There is no salvation for Africa outside political unity, outside a United States of Africa. ... If we remain fragmented into little states, we will remain weak, politically weak," Wade told journalists on Monday night.

Asked about earlier Senegalese threats that a group of five or six states could forge ahead with federation, Wade said: "Theoretically, it is not excluded ... but I don't think we'll be going in that direction.

"If the conference as a whole makes progress towards a government that it calls a continental government, a union government ... that will create a basis that we can accept."

But the position of Wade, Gaddafi and their supporters remained far from that of the majority gradualist group.

"In Uganda, we are not in favour of forming a continental government now," said President Yoweri Museveni, one of the more outspoken members of the gradualist group, based around the Anglophone southern and eastern blocs.

TENSION

Museveni said that while economic integration was possible, people from different regions of Africa were incompatible politically and forcing them together would create tension.

"I salute the enthusiasm of those who advocate for continental government now. I however, do not want us to move from one mistake -- Balkanisation -- to another mistake of oversimplification of very complex situations," Museveni said.

The union debate was the single item on the summit agenda but with only hours before the scheduled close at midday on Tuesday, the leaders appeared to be looking for a compromise that would satisfy all sides.

Umaru Yar'Adua, newly elected president of Nigeria, Africa's most populous country, also came down on the side of gradualism in his speech to the summit, saying that although it was imperative to consider a union government, the challenge was in how to implement this vision.

There was "a strong case for the notion of gradual incrementalism," he said.

With both Nigeria and South Africa, the regional power, backed by the eastern and southern blocs, supporting a gradual process, the pro-union group looked isolated, although Wade said the debate was finely balanced.

Lesotho's Prime Minister Pakalitha Mosisili summed up the view of the moderate bloc when he told the summit: "Even as we pursue this noble objective, we cannot ignore the factors that militate against it."

He said surrender of national sovereignty in the interests of unity was a "tall order".

Mosisili added: "We also believe that ... integration should be gradual rather than precipitous. It must be evolutionary rather than revolutionary."

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