The resolution, which Algeria had been working on for three weeks, had demanded "an immediate humanitarian ceasefire that must be respected by all parties."
"Proceeding with a vote today was wishful and irresponsible... we cannot support a resolution that would put sensitive negotiations in jeopardy," said Washington's ambassador to the UN Linda Thomas-Greenfield, while advocating an alternate resolution drafted by the US.
The vote came as Israel prepares to move into the southern Gaza Strip city of Rafah, where some 1.4 million people have fled, as part of its mission to destroy the Palestinian militant group Hamas.
However Israel is facing increased pressure to hold off, including from its closest ally the United States.
"This is not, as some members have claimed, an American effort to cover for an imminent ground incursion -- rather it is a sincere statement of our concern for the 1.5 million civilians who have sought refuge in Rafah," said Thomas-Greenfield ahead of the vote.
The draft resolution had opposed the "forced displacement of the Palestinian civilian population."
It additionally demanded the release of all hostages taken by Hamas in an attack on October 7.
But, similarly to other previous drafts spurned by the United States and Israel, the text did not condemn that assault by Hamas, which left about 1,160 people dead in southern Israel, mostly civilians, according to an AFP tally of official Israeli figures.
Israel's retaliatory campaign has killed more than 29,000 people in Gaza, mostly women and children, according to the latest count by the Hamas-run territory's health ministry.
The United States warned over the weekend that Algeria's text was not acceptable, threatening to veto it.
Washington had argued that the passage of such a ceasefire resolution would endanger ongoing delicate diplomatic negotiations which could see the release of hostages from Gaza.
The United States instead circulated an alternate draft.
While that text does include the word "ceasefire" -- which the United States has previously avoided, vetoing two drafts in October and December which used the term -- it does not call for the end of hostilities to happen immediately.
- 'Moral obligation' -
Echoing recent comments by Biden, who has come under increasing pressure from his supporters ahead of November presidential elections, the US draft supports a "temporary ceasefire in Gaza as soon as practicable, based on the formula of all hostages being released."
It also mentions concern for Rafah, stating that "a major ground offensive should not proceed under current circumstances."
There is no "deadline" for a vote on the American draft, a senior US official said Monday, adding there would be no "rush."
The US text "as it is... cannot pass," one diplomatic source said, pointing to several issues around the phrasing of "ceasefire."
Eyebrows were raised among some diplomats who questioned Washington's true intent.
"Do they really want this resolution or do they want to push the other side to veto?" asked one, pointing to the likelihood of a Russian veto of any text produced by the United States.
The mere fact the United States has introduced a counter-resolution is likely to "make Israel nervous," Richard Gowan, an analyst at the International Crisis Group, told AFP.
"The US is finally using the Security Council as a platform to signal the limits of its patience with the Israeli campaign," Gowan said.
The bloc of countries at the UN known as the Arab Group reiterated its support for the Algerian draft ahead of Tuesday's vote.
"No excuse can rationalize the Security Council's inertia, and all endeavors must converge to halt the ongoing carnage in Gaza," it said.
"The time has come for the Security council ... (to) make a resolute decision before it's too late."