Confederation vs. Federation
 

By definition the difference between a confederation and a federation is that the membership of the member states in a confederation is voluntary, while the membership in a federation is not.
Sometimes confederation is erroneously used in the place of federation. Some nations which started out as confederations retained the word in their titles after officially becoming federations, such as Switzerland. The United States of America was a confederation before it became a federation with the ratification of the current U.S. constitution in 1788.

[B]Comparison:[/B]

[B]1. Sovereignty[/B]

[I]Confederation:[/I] Held by the member states. In a Confederation, the federal government is accountable to the member states, who are the ultimate authority.
[I]Federation:[/I] Held by the federal government. In a Federation, the federal government will hold the ultimate authority and the member states will be subordinate to it.

[B]2. Central Authority[/B]

[I]Confederation:[/I] The central authority of a confederation is usually a weak body appointed by the member states.
[I]Federation:[/I] The central authority of a federation is a federal government which governs the member states.

[B]3. Powers of the Central Authority[/B]

[I]Confederation:[/I] Usually will focus on joint foreign policy and defense matters, but rarely will have the power to do much more than that.
[I]Federation:[/I] Determined by the constitution of the federation, but will generally have rights to exercise control over the diplomatic, military, economic, and legal spheres of the member states.

[B]4. Examples (According to Wikipedia)[/B]

[I]Confederation:[/I] Toltec Empire, League of Mayapan, Crown of Aragon, Confederation of Madya-as, Old Swiss Confederacy, New England Confederation, Aro Confederacy, United States of America (1781-1789), Confederation of the Rhine and many more.
[I]Federation:[/I] Canada, United States of America, Mexico, Venezuela, Brazil, Argentina, Belgium, Germany, Switzerland, Austria, Bosnia and Herzegovina, Estonia, Russia, Iraq, United Arab Emirates, Pakistan, India, Nepal, Malaysia, Australia, Sudan, and many more.

Source: diffen