The council "deplored this launch" as a violation of UN resolutions, said US ambassador Susan Rice, the council president for April.
The UN's paramount security body imposed sanctions on the isolated North in 2006 and 2009 after it staged nuclear weapons tests. There are now fears that the North could stage a new nuclear test.
The 15-member Security Council is still negotiating a possible "presidential statement" on the North Korean launch but diplomats said China had so far blocked moves to use stronger language.
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China, the North's closest international ally, has yet to say publicly that it considers the North Korean act a breach of UN resolutions or international law.
"We think the peace and stability in the region is really important. We have got to do everything possible to defuse tension rather than inflame the situation there," China's UN ambassador Li Baodong told reporters on Thursday when asked what his country's reaction to a launch would be.
"I think we should do everything possible to make sure that peace and stability will be maintained in the region."
Rice said council members "agreed to continue consultations on an appropriate response" to North Korea.
It was "premature" to say what kind of measure the council might take, she added. The United States "thinks a credible reaction is important," Rice insisted.
Western capitals have all condemned the launch of the rocket which disintegrated soon after blastoff in a major embarrassment for the reclusive communist state.
Russia, China and India, which are also on the 15-member Security Council, have been more measured, urging all parties to show restraint.
The most heated reaction to the politically explosive test has come from the United States, Japan, South Korea and European nations.
Japan and South Korean, which are on the frontline have demanded tough UN action on North Korea.
United Nations chief Ban Ki-moon termed the rocket launch "deplorable" and urged the North "not to undertake any further provocative actions that will heighten tension in the region."
The test was supposed to have been the centerpiece of weekend commemorations marking the centenary of the birth of North Korean founding leader Kim Il-Sung and helping to formalize a new cult of personality around the rule of Kim Jong-Un, who took over in December.
But the rocket flew for just over two minutes before it broke up and fell into the Yellow Sea.
About four hours after the misfiring, the North admitted the satellite had failed to enter orbit, and that "scientists, technicians and experts are now looking into the cause of the failure".
Kim Jong-Un took over after his father Kim Jong-Il died last December, the second dynastic succession since the country was founded in 1948.
