A confederation in modern political terms is a permanent union of political units for common action in relation to other units. Usually created by treaty but often later adopting a common constitution, confederations tend to be established for dealing with critical issues such as defense, foreign affairs or a common currency, with the central government being required to provide support for all members.

The nature of the relationship among the states constituting a confederation varies considerably. Likewise, the relationship between the member states, the central government and the distribution of powers among them, is highly variable. Some looser confederations are similar to intergovernmental organizations, while tighter confederations may resemble federations.

In a non-political context, confederation is used to describe a type of organization which consolidates authority from other autonomous or semi-autonomous bodies. Examples include sports confederations or confederations of pan-European trades unions.