The Security Council has reportedly been told that 116 people were killed - dozens of them children - and 300 injured.
A diplomat at the meeting said Major General Robert Mood, head of the UN mission in Syria, had described most of the deaths being from shrapnel and gunfire at "point-blank" range.
The meeting was taking place amid new claims from Syrian opposition groups that at least 30 people were killed on Sunday when Syrian army tanks shelled neighbourhoods in the city of Hama.
Britain's Foreign Secretary William Hague has said he was "absolutely sickened" by the Houla attack.
He called for "urgent" action from the UN Security Council and "a strong international response" to the incident - one of the bloodiest in Syria's 14-month-old uprising against President Bashar al Assad's regime.
Syria's charge d'affaires has also been summoned to the Foreign Office so Britain can stress its condemnation.
But the Syrian government has denied its forces were responsible - blaming instead "terrorists" of the atrocity.
"Women, children and old men were shot dead. This is not the hallmark of the heroic Syrian army," said foreign ministry spokesman Jihad Makdesi.
The UN mission in Syria warned of "civil war" after its observers initially counted more than 92 bodies, about a third of them children, following an apparent artillery barrage in Houla.
The rebel Free Syrian Army (FSA) said it was no longer committed to the UN-backed peace plan unless there was prompt international intervention to protect civilians, and called for airstrikes against regime forces.
Fawaz Zakri, a member of the main opposition bloc Syrian National Council (SNC), said the assault amounted to "genocide".
"We are now facing a genocide and mass displacement in Syria. Somebody must stop this regime from attempting to do more massacres in Syria," he said.
US Secretary of State Hillary Clinton said Washington would work with its international allies to increase the pressure on President Bashar al Assad and his "cronies".
"Rule by murder and fear must come to an end," she declared.
Mr Hague has spoken to Kofi Annan, the UN and Arab League envoy who brokered a truce which has been flouted daily since it came into effect April 12, and condemned the attack as a "brutal" breach of international law.
Mr Annan will be visiting Syria on Monday for fresh talks with senior officials, while Mr Hague meets Russian foreign minister Sergei Lavrov in Moscow.
Unified international action to tackle the Syrian crisis has proved difficult with both Russia and China vetoing UN resolutions condemning Mr Assad's regime.
Foreign Office minister Alistair Burt said the Security Council would need to have "all the options on the table".
He told Sky News' Murnaghan programme: "Plainly the events (in Houla) throw into very sharp relief what's happening on the ground and the frustrations of the Security Council and those that have backed the plan.
"Yesterday's events were appalling. The evidence would appear to point to the hands of the Syrian regime for the massacre of men, women and children.
"We believe there should be an urgent meeting of the Security Council and they will have to have all the options on the table that they need in order to show that the international community cannot be thwarted."
Mr Burt said it was important the Russians and Chinese backed Mr Annan's plan to prompt a collective international response to the latest bloody incident.
"There is a fear that things could get worse," he warned.
"Sectarian violence is now starting to appear. There is a danger of a spread to Lebanon and into surrounding areas."
Asked if Britain was going to ban members of the Syrian regime from attending the London 2012 Olympics, Mr Burt said there was a distinction between athletes and others.
"Senior military figures attempting to come to the UK will have to pass a test that their presence here is conducive to the public good," he said.
He added: "It is clear that certain figures shouldn't really be contemplating a visit to the UK in these circumstances."
Activists claimed government troops continued shelling residential areas in central Syria on Sunday.
They said the central city of Hama and the rebel-held town of Rastan north of Homs were targeted.
There were also reports of clashes between troops and rebels in the Damascus suburb of Harasta and in the capital's central Midan district, as well as a bomb attack on a security vehicle in the Mazzeh district, near a military airport.
The Britain-based Syrian Observatory for Human Rights said there were casualties as a result of the bombing, but had no further details.
The total death toll since the uprising against Mr Assad's rule has now topped 13,000.
UN head of mission Major General Robert Mood called what happened in Houla a "brutal tragedy".
Gen Mood told Sky News: "Whichever way you look at this, whoever started and whoever responded and whoever contributed, to this deplorable act of violence should be held responsible.
"This indiscriminate and disproportionate use of force is unacceptable and I would also say unforgivable."
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