At an emergency meeting on Monday, Algerian UN Ambassador Abd Allah Baali said he would push for a vote on Tuesday.
Baali called the council meeting in reaction to the Israeli attacks that has resulted in at least 63 Palestinian deaths.
"The Palestinian people are exposed to a virtual war of extermination," Baali told the open debate. "The unfettered use of brutal force is terrifying."
But US Ambassador John Danforth accused the 15-nation Security Council as well as the 191-member General Assembly of acting "as the adversary of Israel and the cheerleader of the Palestinians" rather than saying "stop it" to both sides.
He said the council should not adopt another "one-sided" resolution, indicating a possible US veto.
British Ambassador Emyr Jones Parry, the current council president, said there was "strong support for the thrust of the resolution" and negotiations would resume on Tuesday afternoon.
Israel launched the offensive last Tuesday.
At least 63 Palestinians have
been killed in the onslaught
Palestinian UN observer Nasir al-Qudwa said his leadership condemned the "rudimentary" Qassam rocket attacks by Palestinians and especially the killing of Israeli children.
But he contended Israel over the past week had killed 83 people, including 20 children, wounded more than 350 others and demolished homes, using 2000 soldiers, 100 tanks and a "massive use of helicopter gunships".
"Israel persists in committing war crimes and acts of state terrorism against the Palestinian people," al-Qudwa said. "There is no justification for this Israeli hysteria, for these widespread killings and deliberate destruction."
The draft resolution reaffirms support for the nearly dormant "road map" for Middle East peace and demands "the immediate cessation of all military operations in the area of northern Gaza" and the withdrawal of Israel from there.
Israeli Ambassador Dan Gillerman told the council the latest attacks from Gaza were part of a long line of terror onslaughts designed to kill as many Israelis as possible, including five people over the past few months.
Kofi Annan says Israel's charges
against UN are to be investigated
He also attacked again UN relief operations, saying Palestinian "terrorists" had used them as a front.
Israel earlier accused UN ambulances of carrying rockets.
The world body denied the charge and demanded an apology. UN Secretary-General Kofi Annan said he was sending a team to Israel to investigate the allegations.
Most council members said the Israeli response to the Palestinian rockets was disproportionate to the losses it suffered.
Typical was Russian Ambassador Andrei Denisov, who said the Israeli attacks went beyond "what was required to crush the activities of extremists".