The army has stepped into a power vacuum left by Compaore, who was forced to resign last week in the wake of violent demonstrations at his attempt to extend his 27-year-rule that some have likened to the Arab Spring.
It named Lieutenant Colonel Isaac Zida as interim head of state, sparking angry protests and prompting the international community to threaten sanctions if the army refused to back down and hand power back to the civilians.
But the African Union kept the pressure on, slapping a 14-day deadline on the military top brass at a crisis meeting in Ethiopian capital Addis Ababa.
"The African Union is convinced that the change has been against democracy," said Simeon Oyono Esono, head of the AU's Peace and Security Council.
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Esono said the AU, which has been backed by the United Nations, the United States and the European Union, took into account the origin of the regime change in a popular revolt when deciding how long to give the army to reverse course.
Zida had promised the new government would be "a transitional body within a constitutional framework" as he addressed diplomats in a morning meeting at the foreign office ahead of the AU's announcement.
"This transitional body will be headed by a person appointed by the consensus of all actors in public life," he said.
He gave no timetable for the transition but said he wanted a new regime in place within the "shortest possible" period.
Traffic flowed normally in the streets of the capital Ouagadougou after the latest protests on Sunday, with the largest market ending a six-day shutdown and banks open, according to an AFP journalist.
Troops yesterday had cracked down on several thousand protesters gathered at a rally against the military takeover in the city's central square.