The council's 15 members issued a statement pressing the leaders to "form, as quickly as possible, a government that is inclusive and represents the will of the Iraqi people."
UN chief Ban Ki-moon, in his latest report on Iraq, made a similar appeal, pressing Iraqi leaders "to show a higher sense of urgency and work together to forge an agreement through an inclusive process, without further delays caused by either domestically or externally generated considerations."
He warned that continued delays in forming a government were fueling "a growing sense of uncertainty in the country," which, he said, "elements opposed to Iraq's democratic transition may try to exploit."
In early June Iraq's highest court certified results of the March parliamentary polls, in which the party headed by former prime minister Iyad Allawi received more votes than the coalition led by Prime Minister Nuri al-Maliki in the 325-member Council of Representatives.
With no single party winning a majority, a Shiite "super-bloc" was formed between the second and third-placed parties in the vote to try to supplant Allawi.
However Maliki has lost the backing of smaller Shiite parties who now want him to stand down.
The lingering political deadlock coincides with an upsurge of extremist violence, with a total of 42 people killed Tuesday, just days after government ministries said more people died in unrest in July than in any month since May 2008.
After hearing a briefing from UN special representative to Iraq Ad Melkert, the Security Council slammed the recent "terrorist" attacks in the country.
Melkert meanwhile warned council members that "the practical implications of the US military drawdown are now starting to affect the work" of the United Nations Assistance Mission in Iraq (UNAMI), the mandate of which expires Saturday.
Monday, US President Barack Obama pledged that his country would end its combat mission in Iraq as scheduled on August 31 despite the recent flare-up in violence.
There are about 65,000 US soldiers currently stationed in Iraq, and Obama has ordered the force to draw down to 50,000 by September 1.
Melkert said he was in talks with the Iraqi government "to ensure that the conditions for the future UN presence are on a secure and sustainable basis."
This, he added, would require the finalization of the UN-Iraq status of mission agreement and an increase in the UN's own security and operational capacity involving aviation, transport and infrastructure.