Syria on Monday rejected an Arab League plan for President Bashar al-Assad to step down and clear the way for a national unity government, a call Europeans welcomed as a potential "game-changer".
"Syria rejects the decisions taken which are outside an Arab working plan, and considers them an attack on its national sovereignty and a flagrant interference in internal affairs," an official said on state television.
In a surprise move the Arab League on Sunday asked the United Nations to support a new plan for ending the bloodshed in unrest-swept Syria that would see Assad transferring power to his deputy and a government of national unity formed within two months.
The plan was detailed by Qatar's premier, Sheikh Hamad bin Jassim al-Thani, at the end of a meeting of Arab foreign ministers in Cairo to determine the fate of an Arab League observer mission in Syria.
"If this initiative is not put in place (by Damascus), we will go to the (UN) Security Council, where the decisions will be taken," Sheikh Hamad warned.
At the United Nations, European powers swiftly lauded the plan with Germany's UN ambassador Peter Wittig calling for a debriefing from the Arab League "as soon as possible" and saying the decisions taken in Cairo could be "a game-changer, also for the Security Council."
The Security Council has been blocked for months over Syria, with Russia and China maintaining that any moves in the UN body against Assad would be the first steps toward regime change by force, as in Libya last year.
But EU foreign ministers on Monday adopted more sanctions against Syria, adding security officials to a new list of people and firms hit by a travel ban and asset freeze.
"We call again for the violence to stop, for the (Arab League) monitors to be able to do their job unheeded," said EU foreign policy chief Catherine Ashton, whose bloc is already enforcing an arms embargo and oil imports ban on Syria.
The tough talk from the Arab League comes after widespread criticism that their observer mission, deployed since December 26, had failed to stem the government's bloody crackdown on pro-democracy protests.
In response Saudi Arabia said it was pulling out its observers from the mission because the Syrian government had "not respected any of the clauses" of an Arab peace plan.
But despite the criticism, the League agreed to extend the mission and boost the force from its current number of about 165 observers on the ground.
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The mission's chief, General Mohammed Ahmed Mustafa al-Dabi of Sudan, defended his team's record on Monday, and said the withdrawal of the Saudi observers would not affect the mission, which had the Arab League's "logistical, political and financial support."
Arab foreign ministers urged in their final statement from Sunday that the Syrian government and opposition factions engage in a serious dialogue to be able to achieve the formation of a unity government.
The new government's mission would be to implement the Arab League plan and to prepare free and fair legislative and presidential elections under both Arab and international supervision.
It would also prepare the election of a constituent assembly within three months and a new constitution which would be put to a referendum.
The Qatari premier said the new plan envisaged the "peaceful departure of the Syrian regime," adding the plan "resembles the one on Yemen" that led to President Ali Abdullah Saleh agreeing to step down.
Syrian state media pinned what it viewed as divisions within Arab ranks on Qatar's emir, Sheikh Hamad bin Khalifa Al-Thani, a key figure in efforts to pile up the pressure on Damascus.
"All his decisions are driven by hatred and vengeance, not only against Syria and Syrians but against all Arabs," charged Ath-Thawra newspaper.
The Syrian National Council, the country's largest opposition group, which lobbied in Cairo for UN intervention, welcomed the League's statement and insisted on the need for Assad's departure.
Another opposition group, the Local Coordination Committees, however, said the plan was "unattainable" and would only allow the regime more time to pursue a deadly crackdown.
International pressure on Assad's regime has been mounting, as more than 5,400 people have been killed since anti-government protests broke out last March, according to UN figures.
On the ground, funerals in Douma near Syria's capital drew more than 150,000 people, according to the Syrian Observatory for Human Rights, which said 18 civilians were killed across the country on Monday.
The United States, meanwhile, said Syria had offered to take some steps Washington had asked for to boost security at the US embassy in Damascus but that more was needed for the mission to stay open.
Last week, the US state department said it was considering closing the embassy over growing safety concerns.