Diplomats said after the closed session that the Security Council "strongly condemned" the Tigers and accused them of using civilians trapped in a small strip of land as human shields.
The Security Council also expressed its "deep concern" about the worsening humanitarian situation, but so far has not taken any action.
Rights groups are calling for a two-week ceasefire to let civilians out.
Anna Neistat, of Human Rights Watch, said: "We do have numerous civilian casualties, but we are not yet at the stage where a bloodbath is going on full scale. It is a matter of days if not hours."
The Sri Lankan military says it has "rescued" 80,000 Tamils over the past three days. The government ordered the Tamil Tigers to surrender on Tuesday, saying the military was about to start its final assault.
Catherine Bragg, the UN deputy humanitarian affairs chief, said the UN had not yet received permission to enter the conflict zone or to monitor the screening of civilians who manage to escape the fighting, a claim disputed by the Sri Lankan government.
The Sri Lankan government was also criticised for not providing full assistance to all civilians fleeing the LTTE-held zone.
Al Jazeera's David Chater, reporting from Trincomalee in the northeast, said: "[The government] sfay that it is the Tamil Tigers who are holding the Tamil civilians there, using civilians as human sandbags. I've certainly talked to many people and they've told me that is correct.
"I think perhaps the Sri Lankan government could be held responsible for some of the injuries if they are being caused by indirect fire - that is shelling, bombing, mortars," he said.
"But they made it very clear to me that they say they are using minimum force, these are their fellow civilians they do not want to harm them, their target is the Tamil Tigers."
Our correspondent said that many of the refugees said that they were bitter about the way the LTTE had treated them.
"There seems to have been a sea change in the opinion of the Tamil civilians about the Tamil Tiger leadership," he said.
"[After] seeing the men that were supposed to be protecting them, fighting for their own homeland, exploiting them, shooting at them when they tried to escape, stealing the humanitarian food supplies."
This has eroded support for the LTTE, which could hamper any guerrilla force operating after the conventional military war is over, our correspondent said.
Both sides guilty
Susan Rice, the US ambassador to the UN, suggested that both sides might be guilty of violating international law.
"The fact that both sides have been shooting at civilians as they leave the safe zone is one gross manifestation of the apparent violation of international humanitarian law," she said.
In remarks to the US congress on Wednesday, Hillary Clinton, the US secretary of state, said "the Sri Lankan government knows that the entire world is very disappointed" at the "untold suffering" being brought by its offensive against the Tigers".
She also said "there seems to be very little openness on the part of the Tamil Tiger leadership to cease their efforts so that we could try to get in and help the people".
China and Russia are among some countries which have opposed the idea of a formal Security Council discussion of the conflict, which has spanned 26 years, saying it is an internal matter for the Sri Lankans.
The UN estimates that more than 4,500 civilians have been killed in the past three months and the International Committee of the Red Cross says up to 50,000 people remain trapped in the less than 20sq km area still held by the Tigers.
The Sri Lankan military said on Thursday that the group's former media spokesman and an interpreter who both played prominent roles in dealing with the media, had surrendered.
The LTTE has been fighting for an autonomous homeland for ethnic Tamils in the north of the country, arguing that they are marginalised by the majority Sinhalese government.
A Norway-brokered ceasefire fell apart during 2007 and the government said it would "wipe out" the Tigers by the end of 2008.