The Iran-backed Huthi rebels have blamed the Arab coalition for yesterday's attack, one of the deadliest since it launched a military campaign against the Shiite insurgents in March last year.
But after initially denying any responsibility, the coalition said it was ready to launch a probe into the "regrettable and painful" strike, which a UN official said also wounded more than 525 people.
"The coalition will immediately investigate this case along with Joint Incidents Assessment Team in Yemen and experts from the United States who participated in previous investigations," it said in a statement carried by the Saudi Press Agency.
"The result of the investigation should be announced as soon as it's completed."
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The UN humanitarian coordinator in Yemen, Jamie McGoldrick, said aid workers were "shocked and outraged" by the attacks that hit a community hall in the Yemeni capital where mourners had gathered.
Following the report, the United States said it would review its support for the Saudi-led coalition in Yemen.
"We are deeply disturbed by reports of today's air strike on a funeral hall in Yemen, which, if confirmed, would continue the troubling series of attacks striking Yemeni civilians," White House National Security Council spokesman Ned Price said in a statement.
Price stressed that "US security cooperation with Saudi Arabia is not a blank check", and called on all sides to implement an "immediate" ceasefire.
In August, the US military announced it had slashed its number of intelligence advisers supporting the Saudi-led coalition following concerns over civilian casualties.
"The coalition confirms that its troops have clear instructions not to target populated areas and to avoid civilians," said the Saudi-led alliance.
The coalition - which also comprises Bahrain, Egypt, Morocco, Qatar, Sudan and the United Arab Emirates - has faced repeated criticism from rights groups over civilian casualties in its campaign in Yemen.
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