"The situation is very, very seriously deteriorating, with the Huthis taking power and making this government vacuum," Ban said, referring to the Shiite militia which dissolved the Sanaa government and parliament on Friday.
"There must be restoration of legitimacy of President Hadi," the UN chief told reporters after talks with King Salman in neighbouring Saudi Arabia.
The Huthi militia on Friday created a "presidential council" in a move they said was designed to fill a power vacuum and would head off the threat from al-Qaeda, which has a strong presence in east and south Yemen.
The militia overran Sanaa in September, then seized the presidential palace and key government buildings last month, prompting Hadi and Prime Minister Khalid Bahah to resign.
Also Read
Yemen has been riven by instability since the Arab Spring-inspired uprising that forced strongman Ali Abdullah Saleh from power in 2012.
"I'm concerned that all these Huthis and... Former president Saleh have been undermining the transition process," said Ban, who arrived in the kingdom to pay his respects after the January 23 death of Salman's predecessor, king Abdullah.
"This situation in Yemen has been the major topic which we addressed," Ban said, adding that it must be dealt with through UN Security Council and GCC initiatives.
Ban said UN envoy Jamal Benomar has been "working very hard in Yemen, facilitating a way out of the current political crisis and a return to the path of the peaceful political transition."
Security Council president Liu Jieyi has said its 15 members were ready to "take further steps" if UN-brokered negotiations to resolve Yemen's political crisis were not resumed "immediately".
The Huthis said they would set up a national council of 551 members to replace parliament in the violence-wracked nation, which is a key US ally in the fight against al-Qaeda.