U.N. Secretary-General Ban Ki-moon warned the Security Council on Thursday that a full-blown civil war in Syria was 'imminent,' while international mediator Kofi Annan said it was time to step up the pressure on Damascus to halt the violence.

The Syrian opposition and Western and Gulf nations seeking President Bashar al-Assad's ouster increasingly see Annan's six-point peace plan as doomed because of Syria's consistent use of military force to crush an increasingly militarized opposition.

Western Security Council diplomats said the message from Annan and Ban at the United Nations was clear: It was time to hit Assad's government with sanctions.

"The Syrian people are bleeding," Ban told reporters after addressing the Security Council. "They are angry. They want peace and dignity. Above all, they all want action."

"The danger of a civil war is imminent and real," he said, adding that "terrorists are exploiting the chaos."

Both Ban and Annan strongly condemned a reported massacre of at least 78 people Mazraat al-Qubeir and acknowledged that Annan's peace plan was not working.

"Today's news reports of another massacre in (Mazraat) al-Qubeir are shocking and sickening," Ban told a special session of the 193-nation General Assembly.

"We condemn this unspeakable barbarity and renew our determination to bring those responsible to account," he said.

Ban said U.N. monitors hoping to investigate the reports were denied access to the site where opposition activists say the massacre occurred on Wednesday.

"They are working now to get to the scene," he said. "And I just learned a few minutes ago that while trying to do so the U.N. monitors were shot at with small arms."

Syrian U.N. Ambassador Bashar Ja'afari told the General Assembly the new report was 'truly an atrocious massacre. It is unjustifiable'.

Syria's government has blamed recent atrocities on the opposition and Islamist extremists it calls terrorists.

Speaking to the 15-nation Security Council, Ban said hopes for success of Annan's peace bid were fading and suggested that the United Nations must soon decide whether its 300-member monitoring mission in Syria was sustainable or useful, U.N. diplomats said, speaking on condition of anonymity.

It was the first time the U.N. leader floated the idea of pulling the plug on the observer mission, which many countries had hoped could help end 15 months of violence.

TIME FOR SANCTIONS?

Annan warned the council that the Syrian crisis would soon spiral out of control and called for 'substantial pressure' on Damascus and penalties for undermining the peace effort, U.N. diplomats said.

Earlier in the General Assembly he said failure to comply with his peace plan should not be ignored.

"It must be made clear that there will be consequences if compliance is not forthcoming," Annan told the assembly.

Britain's U.N. ambassador, Mark Lyall Grant, told reporters after a three-hour closed-door meeting of the Security Council with Ban and Annan that it was time for sanctions.

"I suggested that the time had come when the Security Council should strengthen its support for the plan, including through a ... resolution with clear timelines and triggers for sanctions in the event of non-compliance," Lyall Grant said.

French Deputy Ambassador Martin Briens echoed Lyall Grant, telling reporters Annan 'has asked us for more than words. He has asked us for action'. German Ambassador Peter Wittig and Arab League chief Nabil Elaraby also favor sanctions.

Russia, a staunch ally of and arms supplier to Assad, and China have resisted calls for sanctions against Damascus. Both have veto power on the council.

Russian Ambassador Vitaly Churkin did not explicitly rule out the idea of sanctions, though he accused his Western counterparts of focusing solely on the government's violations and ignoring the opposition's breaches of Annan's peace plan.

"There is one missing link in what they are saying," Churkin said. "They are not proposing anything which would resolve the problem of how to deal with the opposition."

Annan confirmed to reporters he was proposing a new contact group that would include Russia, China, the United States, Britain, France and key regional players with influence on Syria's government and the opposition such as Iran. Diplomats said he would also include Saudi Arabia, Qatar and Turkey.

U.S. Ambassador Susan Rice made clear Washington has problems with such a contact group.

"Iran is part of the problem in Syria at the present," she said. "There's no question that it is actively engaged in supporting the government in perpetrating the violence."

Annan did not, however, bring up the contact group idea during the council session, diplomats said, adding that he was discussing it with individual delegations instead.

Churkin reiterated that Moscow wanted to organize a meeting with the permanent Security Council members, Iran and other regional players. He suggested that the conference could be a first step towards establishing Annan's contact group.

The representative of Iran, Assad's other main ally, hinted that a full civil war in Syria could spread beyond its borders.

"There is an urgent need for all those who are providing money, logistics and arms to the opposition groups to stop that immediately. They should know that the smoke from the fire in Syria will, in one way or another, cover the region as a whole," Iranian Ambassador Mohammad Khazaee told the General Assembly.

The conflict has already sparked turmoil in Lebanon and on the border of Turkey.

Syria accuses Qatar and Saudi Arabia of arming the opposition, while the United Nations has said recent bombings appeared to have been the work of extremist militants.