He said on Friday the reported mass killing is a sign the peace plan is being ignored, and singled out the government for using heavy weaponry in populated areas, something it was supposed to have stopped doing three months ago.
Annan, in a letter to the Security Council, said that the Syrian government's use of artillery, tanks and helicopters against the village of Tremseh violated its commitments under a UN-approved peace plan.
Hillary Clinton, the US secretary of state, has called for an immediate ceasefire in and around Hama to allow the UN observer mission to enter Tremseh.
"The Security Council should put its full weight behind the Annan plan for an immediate ceasefire and a political transition and make clear to the Syrian regime that there will be consequences for non-compliance," Clinton said.
Major General Robert Mood, head of UN monitor mission, told reporters in Damascus that a group of observers about five kilometres away during the violence confirmed the use of heavy weaponry and attack helicopters.
He said his team was ready to investigate if a cease-fire is reached.
Syria's opposition on Friday urged the UN Security Council to pass a binding resolution against Damascus following reports.
The Syrian National Council (SNC), the main opposition bloc, said on Friday: "To stop this bloody madness which threatens the entity of Syria, as well as peace and the security in the region and in the world, requires an urgent and sharp resolution of the Security Council under Chapter VII (of the UN Charter) which protects the Syrian people."
Chapter VII allows for punitive measures against regimes considered a threat to the peace, including economic sanctions and military intervention.
"We expect members of the Security Council to assume total responsibility to protect defenceless Syrians against these shameful crimes," said the SNC, which added that the latest killings ranked "among the more infamous genocides of the Syrian regime."
Reports of the killings in the village of Tremseh came after the Security Council envoys held their first talks on rival Russian and Western draft resolutions on Syria, with Moscow spurning calls for sanctions on President Bashar al-Assad's government.
Mood said: "From our presence in the Hama province we can verify continuous fighting yesterday in the area of Tremseh."
"This involved mechanised units, indirect fire as well as helicopters. UNSMIS stands ready to go in and seek verification of the facts, if and when there is a credible ceasefire," he said in a press conference in Damascus.
Manhal, an opposition activist in Hama, told Al Jazeera on Friday that "74 people were buried and prayed upon" a day after the attack. He said most of those killed were rebels. Amateur videos showing mass burials have been posted on YouTube on Friday.
Another source has put the number of dead at 103, providing Al Jazeera with the names of the dead. We are unable to independently confirm the identity of those reportedly killed.
One activist at the anti-regime Sham News Network said the killings happened when pro-regime forces retaliated following a Free Syrian Army (FSA) attack on an army convoy. However, another activist told Al Jazeera that government troops opened fire after the FSA attacked a neighbouring Alawite villages.
Reuters, AFP and AP news agencies reported larger numbers on Thursday night - between 100 and 200 - citing opposition sources.
Meanwhile, troops shot at protesters on Friday in Damascus and Aleppo, the Syrian Observatory for Human Rights said, reporting fresh casualties.
The Syrian government said more than 50 people were killed when Syrian forces clashed with "armed gangs" that were terrorizing village residents. The regime has referred to those seeking its overthrow as terrorists throughout the 16-month uprising.
Meanwhile, Sana state news agency said "bloodthirsty media in collaboration with armed terrorists massacred residents of Tremseh village" to provoke international intervention ahead of a UN Security Council meeting.
Tremseh, which had a population of 7,000, is neara l-Qubayr, where at least 70 people were reported killed on July 6.
Like Qubayr, Tremseh is a majority Sunni village situated near Alawite ones.
Assad belongs to the Alawite community - an offshoot of Shia Islam- although the vast majority of Syrians are Sunni.
Annan on Monday will meet Russian Foreign Minister Sergei Lavrov for talks on the crisis in Syria, Russian news agencies reported.
Talks between Russia and world powers at the United Nations have already been dogged by disputes, with Russia proposing its own resolution that the West said fell short of expectations.
In turn, Russia, which dubbed the "massacre" as a "bloody atrocity", has condemned a Western-backed draft resolution as "unacceptable" as it outlines sanctions against Assad.
More than four months on from his appointment, Annan has proved powerless to end the violence that monitors say has cost 17,000 lives, mostly civilians, since the anti-Assad uprising broke out in March 2011, at first with peaceful protests.
The former UN chief brokered a six-point peace plan in March calling for an inclusive political process, a ceasefire, humanitarian assistance, release of arbitrarily detained persons, freedom of movement for journalists, and to allow peaceful demonstration