Kenyan President Mwai Kibaki's Party of National Unity and opposition leader Raila Odinga's Orange Democratic Movement each appointed three-member negotiating teams who began meeting Wednesday, the BBC reported.
Tuesday, Annan told each side they had two weeks to resolve "immediate political issues" and up to a year to sort out further details, the report said.
The political dispute over alleged vote rigging in the Dec. 27 vote has tribal implications, pitting Kibaki's Kikuyu tribe against Luos and Kalenjins loyal to Odinga.
As many as 900 people have been killed since the results were announced. Tuesday, an ODM parliamentarian was gunned down near his home, prompting more clashes that killed at least nine people, the report said.