"We have decided to put forward a draft Security Council resolution on Yemen calling for an immediate cessation of hostilities and a resumption of the political process," British Ambassador Matthew Rycroft told reporters.
The draft text was expected to be circulated to the council's 15 members later in the day, with a vote expected in the coming days.
The decision to seek a formal resolution came after Russia blocked a statement drafted by Britain that condemned the air strike, apparently carried out by the Saudi-led coalition, that killed more than 140 people.
One of the poorest countries in the Arab world, Yemen slid deeper into chaos when the coalition launched an air campaign in March 2015 to push back the Iran-backed Huthi rebels who seized territory including the capital Sanaa.
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Russia, which has friendly relations with Iran, has criticised Western backing for the coalition.
In response to the attack on the funeral, a US warship in the Red Sea was targeted by a missile fired from territory held by the Huthi rebels. They have denied any involvement.
More than 6,700 people - most of them civilians - have been killed in Yemen since the coalition intervened, according to the United Nations.
Yemen ranks as a level 3 emergency - the highest on the UN scale - with nearly 70 per cent of the population of 21 million facing food shortages.
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