Mr Annan, the former United Nations secretary-general who has tried to broker an accord, told the Security Council that the regime had not pulled its troops and heavy equipment out of towns and cities by today, as demanded.
"It is essential that the next 48 hours bring visible signs of immediate and indisputable change in the military posture of the government forces throughout the country, as called upon by the six-point plan," a letter read to the council said. He added that Syria was demanding a guarantee that the rebels lay down their arms and disband, and a commitment by regional nations not to arm them.
These requirements were not part of his original plan, Mr Annan said.
As regime forces continued to shell towns and cities, including allegations of aerial bombardment, Britain and other Western powers called for Mr Assad to be censured by the UN. William Hague, the Foreign Secretary, said he wanted the Security Council to refer Mr Assad to the International Criminal Court. "President Assad and his closest cronies should be under no doubt that they will be held to account for their actions," he said.
The Security Council called for the Syrian government to make a "fundamental change of course" to end hostilities by 6am Damascus time Thursday.
The Turkish prime minister, Recep Tayyip Erdogan, announced he was to visit Saudi Arabia on Friday to discuss the crisis and though neither side gave details of any new proposals, reports from Ankara said Mr Erdogan would call for concerted action.
Analysts say Saudi Arabia and other Arab nations are likely to begin the promised release of hundreds of millions of dollars in aid to the rebels, while Turkey's threatened buffer zone came much closer to reality after Syrian troops fired over the border on Monday.
"Everyone is waiting for the outcome of the Annan mission, which we now know is collapsing or near to collapse," said Mustafa Alani, of the Jeddah-based think-tank, the Gulf Research Centre. "We will witness a different strategy from now on. Turkey and maybe Jordan will act to establish a secure zone and we will see money flow to the opposition."
Mr Annan, who visited a camp for Syrian refugees in south-east Turkey before flying on to Iran to discuss the crisis, refused to declare his initiative dead. But even the Syrian foreign minister, Walid Moallem, only claimed that "some" forces had been pulled back, while on a visit to Russia, Syria's most important ally.
The Russian foreign minister, Sergei Lavrov, said he had urged Mr Moallem to act more "decisively", though he phoned to Mr Annan asking him to put more pressure on the rebels to cease fire.
The opposition says it will not implement the ceasefire set for tomorrow if troops are not withdrawn. Activists inside Syria said the bombardment continued irrespective of the peace plan, with at least 28 civilians killed, along with regime forces and rebels.
Videos posted online showed buildings on fire in Homs. An activist in the southern city of Deraa said residents had seen Air Force Mig-23 jets blasting civilian areas from the skies.