The resolution was intended to increase pressure on Yugoslav President Slobodan Milosevic to loosen his grip on Kosovo, where ethnic Albanians are fighting Serb forces for independence.
The British and French drafted resolution is militarily enforceable, but it doesn't explicitly authorize NATO intervention to stop the Serb offensive on ethnic Albanian separatists.
And it requires the council to revisit the issue before any U.N. authorization of force is granted.
China abstained from the vote, which passed 14-0. "We do not see the situation in Kosovo as a threat to international peace and security," said Chinese ambassador Qin Huasun.
Russia, which has opposed force in the past, went along with the resolution because it didn't specifically authorize military intervention, Russian ambassador Sergey Lavrov said.
"No measures of force, and no sanctions at this stage are being introduced," he said during the council meeting.
Hundreds of people have been killed, and over a quarter million have fled the fighting since a Serb crackdown began in February.
The situation has taken on urgency as winter approaches. An estimated 50,000 people driven from their are roaming the hills of Kosovo with little food and shelter.
The resolution the toughest action the council has taken to date comes a day before NATO defense ministers meet in Portugal to discuss the situation.
German Foreign Minister Klaus Kinkel, in town for the General Assembly, cautioned that "what NATO is deciding tomorrow is a last step in planning, not the first step in deciding" whether to intervene.
The United States, however, has asked the NATO governing body to begin rounding up commitments from NATO countries to contribute to a possible multinational force, two senior U.S. officials said, speaking on condition of anonymity.
Washington has said it doesn't need council authorization for military intervention.
The resolution demands a cease-fire and urges the Serbs and ethnic Albanian leadership to start negotiating a solution to the crisis.
It also demands Milosevic allow international monitoring in Kosovo and the safe return of refugees.
The measure cites Chapter 7 of the U.N. Charter, which means the resolution is militarily enforceable. Nevertheless, there is no explicit authorization for member states to intervene.
The resolution says only that "the council would consider further action and additional measures to maintain or restore peace and stability in the region," if a political settlement isn't reached.
It gives no time frame.
Italy's foreign minister Alberto Dini, in a briefing with reporters, questioned how any direct military action would be carried out.
"One can think of airstrikes, but who will you strike," he asked. "How are you going to distinguish one from another? Who do you want to punish?"
Nevertheless, he said some military option "may be needed to support the population of Kosovo." He didn't elaborate, saying only that the international community "must push diplomacy further and not despair yet."
French Foreign Minister Hubert Vedrine said Wednesday the resolution was "sufficient" for now, but that the council and other countries had to wait for the next stage presumably Belgrade's response to the resolution before addressing the issue of intervention.