British Ambassador Matthew Rycroft told reporters: "We have decided to put forward a draft Security Council resolution on Yemen calling for an immediate cessation of hostilities and a resumption of the political process."
The draft text which will also press for access for humanitarian aid is expected to be circulated to the council's 15 members in the coming days, diplomats said.
The decision to seek a formal resolution came after Russia blocked a statement drafted by Britain that condemned the air strike, apparently carried out by the Saudi-led coalition, that killed more than 140 mourners.
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Russian Ambassador Vitaly Churkin said the statement was "wishy-washy," and called for "some very serious thinking" on how to address the deteriorating situation in Yemen.
One of the poorest countries in the Arab world, Yemen slid deeper into chaos when the coalition launched an air campaign in March 2015 to push back the Iranian-backed Huthi rebels who seized territory including the capital Sanaa.
Russia, which has friendly relations with Iran, has criticized Western backing for the coalition and pointed to the carnage in Yemen in response to criticism of Moscow's campaign in Syria.
A US warship in the Red Sea was targeted by a missile fired from territory held by the Huthi rebels after the attack on the funeral ceremony. The Huthis have denied any involvement.
The United States, which has said it will review its support to the Saudi-led coalition in Yemen, has launched cruise missiles at Huthi sites in retaliation.
More than 6,700 people -- most of them civilians -- have been killed in Yemen since the coalition first intervened, according to the United Nations.
Yemen ranks as a level 3 emergency -- the highest on the UN humanitarian scale -- with nearly 70 percent of the population of 21 million facing food shortages.
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