The thesis substantiates the expediency of the establishment of mediation institution as a way of settling conflicts in the system of public administration of Ukraine, which is determined by long duration and high cost of legal procedures, minor degree of implementation of court orders, excessive legalization and formalization of administrative procedures that require high maintenance costs, low level of public confidence in public authorities, necessity of harmonization of domestic legislation in the field of public administration to the best world practices. The conducted study proposes a conceptual model of the institution of mediation in the system of public administration of Ukraine, which is based on the principles of accessibility, voluntariness, equality of parties, confidentiality, independence and impartiality of the mediator. It provides for the relationship between public authorities, individuals and legal entities and civil society institutions (entities), on the settlement of public disputes (subject matter); introduces eligibility criteria for the conclusion of the reconciliation agreements with public authority. That means namely the rule of law, public acceptability, legal capacity, the common good, matching competencies, regulation and limits of such agreements, which are due to feature the participation of the subject - the public authority. The approaches to the settlement of conflicts (disputes) in the sphere of public administration have been improved by implementing the institution of mediation as an alternative way of resolving disputes, which include a transition from a confrontational to a discursive-consensual form. The author 's definition of the concept "mediation in the public administration system" means a structured procedure for the extrajudicial settlement of the conflict (dispute) with the body (by the authorities) of public authority with the assistance of a mediator (independent facilitator), which helps the parties to independently achieve a mutually beneficial solution, taking into account the law restrictions to ensure the "social consensus". The principles of increasing the effectiveness of public administration through the introduction of mediation are based on the best world practices, in particular, the implementation of the existing institutional state mechanism, the promotion of development and use of the potential of self-regulatory institutions of civil society. The thesis identified the main problems of the existing forms of conciliation and dispute resolution in Ukraine consisting, in particular, in the imperfection of legal regulation and inefficient use of institutional and organizational forms. It has proved the expediency of using the tools of private law (cooperation and agreements) for mediation in the sphere of public administration through their legal regulation and information propaganda. The directions of the formation of the legal framework for mediation provide for the adoption of the Law of Ukraine "On Mediation" and amendments to the current legislation. It will eliminate gaps and extend the operation of this procedure in resolving conflicts in various spheres of public life, including conflicts that arise in the system of public administration by specifying the areas in which the conduct of mediation is desired and permissible. The prospects for further scientific research have been determined.