The Arab League, based in Cairo, Egypt, also issued a statement on Saturday saying that if the allegations panned out, Washington should apologise to Muslims.
The denunciations follow protests elsewhere in the Middle East and Asia after Newsweek magazine reported that US interrogators at Guantanamo Bay, Cuba, placed Qurans in washrooms to unsettle suspects and "flushed a holy book down the toilet".
Many of the 520 inmates at the Guantanamo Bay naval base are Muslims.
In the Yemeni capital, thousands of Sanaa University students demonstrated on campus on Saturday, chanting: "Death to America."
The students, surrounded by security forces, carried banners reading: "We will not falter, we will not tolerate insulting the Quran."
Seven students were arrested, said Radwan Masud, a student union member.
Yemen's official news agency, Saba, quoted an unidentified government official as describing the alleged abuse by US soldiers as "dangerous" and "inhumane".
"Such practices lead to more reactions that harm US interests and obstruct efforts exerted to build bridges of understanding and dialogue between religions and cultures," Saba quoted the official as saying.
"We hate America because it does not stop offending us. We hate it because it doesn't stop making fun of us, our religion and our identity"
President Ali Abd Allah Salih met on Saturday with American Ambassador Thomas Krajeski, who denounced the reported desecration and assured the president that an investigation was under way.
US Secretary of State Condoleezza Rice has promised appropriate action would be taken if the allegations are proven true.
The US government has said the desecration charge was being investigated by the Pentagon.
The 22-nation Arab League also criticised the alleged desecration of Islam's holy book.
"The Arab League asks - if this news is correct - that the US administration deals with these accusations with the required seriousness and punish with the harshest possible penalty all those proven to have played a role in, or planned, such a crime," it said in a statement.
Qatari newspapers also waged a scathing attack on the perpetrators of the alleged abuse, with the country's three Arabic newspapers - Al-Raya, Al-Watan and Al-Sharq - dedicating editorials to the issue.
The alleged desecration is said to
have happened at Camp Delta
Al-Watan described the act as "an unusual crime" and said the purported disrespect to the Quran reflects "the depth of hatred inside some Americans towards Islam", adding that "the US administration's record about tolerance and dialogue between cultures is a delusion".
The newspaper went as far as saying such an act merited recalling Arab and Muslim ambassadors from Washington.
Al-Raya said if the reported abuse turned out to be true, the United States owes Muslims an official apology.
Jordanian columnist Yaser al-Za'atrah also wrote about the issue in the semi-independent Al-Dustur, saying it is the latest of a series of insults against Arabs by the United States.
"We hate America because it does not stop offending us," al-Za'atrah wrote.
"We hate it because it doesn't stop making fun of us, our religion and our identity."
Deadly protests have broken out over the past three days in the Afghan capital, Kabul, with protesters throwing rocks and police shooting back.
In the Gaza Strip on Friday, hundreds of activists from the Islamic group Hamas staged an anti-US protest.