He said a 2004 resolution calling for presidential elections under the constitution and the disbanding of all militias should be immediately implemented.
In the secretary-general's half-yearly report to the UN Security Council, Ban said it was urgent for Lebanon's parliament to convene after not meeting for over a year "to fulfil its constitutional duties in order to elect a president".
"A free and fair presidential election, without foreign interference or influence must take place immediately," he said. "The current situation is no longer sustainable."
The UN chief also called for an Arab League plan calling for General Michel Suleiman to be elected president, the formation of a national unity government and the adoption of a new electoral law, to be implemented immediately.
Lebanon's parliament has postponed meetings to elect a new president 17 times since Emile Lahoud left the post in November.
Another session is due on Tuesday but there was no sign of a breakthrough mainly due to the opposition's demand for veto power over future government decisions, a move the parliamentary majority rejects.
In Monday's report, Ban highlighted the Hezbollah's paramilitary capacity as a key challenge to the government's hold on the legitimate use of force, saying it was time for the parties concerned inside and outside of Lebanon "to set aside this remaining vestige of the past".
He said Syria and Iran, which maintain close ties with Hezbollah, "bear a significant responsibility in supporting such a process" to ensure security, stability and welfare in Lebanon and the region.