(Adds name of traditional ruler, delegate comment)

ADDIS ABABA, Feb 2 (Reuters) - Libyan leader Muammar Gaddafi was elected chairman of the African Union on Monday and made clear he would pursue his vision of a United States of Africa despite reluctance from many members.

Resplendent in golden robes and cap and hailed as "king of kings" by traditional African leaders who accompanied him, Gaddafi accepted a gavel from the outgoing chairman, Tanzanian President Jakaya Kikwete, at a summit in Ethiopia.

He told fellow summit leaders that his project to create a united continental government would be approved at the next meeting in July unless there was a majority against it.

The AU normally relies on consensus in reaching decisions.

"If we don't have a quorum for rejection, that means we have accepted it," Gaddafi said.

"There is a rule in Islam. It is that silence is approval. If you say something to somebody and he is silent then it means that he has accepted."

Gaddafi's election was treated almost like a coronation by a group of customary African leaders dressed in colourful robes and headgear who accompanied him to the conference hall.

"On behalf of the traditional kings, on behalf of all the sultans, on behalf of all the princes, on behalf of all the customary rulers, I want to say thank you to the King of Kings who we have now crowned," declared one of them, King Tossoh Gbaguidi of Benin.

The group, said to represent all Africa's customary rulers, attended a conference sponsored by Gaddafi in Libya last September and he flew them to Addis Ababa for the summit.

Gaddafi, supported by some AU members like Senegal's Abdoulaye Wade, has been pushing for a unity government for years, saying it is the only way to meet the challenges of globalisation, fighting poverty and resolving conflicts without Western interference.

SOUTH AFRICAN OPPOSITION

But others, led by regional economic powerhouse South Africa, see the idea as a distant and impractical prospect that would infringe the sovereignty of member states, although all 53 members of the AU say they agree with the idea in principle.

Gaddafi spent three decades preaching Arab unity before turning most of his attention to the African project, saying the continent was closer to him than Middle Eastern countries who had rebuffed his attempts to forge union.

One delegate, who asked not to be identified, told Reuters: "African countries should work closer together, yes. But a United States of Africa is not something that could happen overnight. Many countries have reservations."

He said Gaddafi's election would not change the situation.

An often heated three-day summit devoted to Gaddafi's project in Ghana in 2007 did not reach a deal despite the participants being berated by the fiery Libyan leader.

The first day of this summit on Sunday again pulled back from accelerating the process.

Kikwete told reporters the meeting had agreed to replace the African Union Commission with an "authority" rather than an immediate pan-regional government as it had proposed. This would be launched at the next summit in July.

He said this would move it closer to a federal government but he was vague on how much real new power the authority would have.