Secretary-General Kofi Annan on Monday ordered all United Nations weapons inspectors and humanitarian staff to leave Iraq and suspended the country's oil-for-food programme.
"I have just informed the [Security] Council that we will withdraw the UNMOVIC [United Nations Monitoring, Verification and Inspection Commission] and atomic agency inspectors. We will withdraw the UN humanitarian workers," Annan said.
A war against Iraq without UN backing would lack legitimacy, the secretary general said, adding Security Council diplomats were "disappointed and frustrated" at being unable to reach a consensus.
"Obviously we seem to be at the end of the road there," he said. "War is always a catastrophe."
He said in case of a war, the UN would extend all humanitarian help to the Iraqis.
The British Ambassador to the UN, Sir Jeremy Greenstock, blamed the abandonment of a second resolution on France.
Flanked by the ambassadors of the US and Spain, Sir Jeremy said the co-sponsors reserved the right to take steps to disarm Iraq.
Moments later, the French Ambassador to the UN, Jean-Marc de La Sabliere, said that in last minute negotiations, "the majority of the council confirmed they do not want a use of force".
However, the US Ambassador to the world body, John Negroponte, rejected this claim and said a vote would have been close.