By Mariam Karouny and Dominic Evans
BEIRUT, May 31 (Reuters) - Syria is nearing full-blown sectarian civil war that would be catastrophic for the entire Middle East, Western nations said on Thursday, urging Russia to end its support for President Bashar al-Assad and put pressure on him to stop the bloodshed.
With anti-Assad rebels urging international envoy Kofi Annan to declare his peace plan dead, freeing them from any commitment to the tattered truce, U.S. Secretary of State Hillary Clinton said the prospect of spiralling violence presented "terrible" danger.
"A civil war in a country that would be riven by sectarian divides ... could then morph into a proxy war in the region because, remember, you have Iran deeply embedded in Syria," Clinton said during a trip to Copenhagen where she urged Moscow to increase pressure on Assad.
Russia, like China, has vetoed two Security Council resolutions calling for tougher action against Damascus, while stressing hopes that Annan's plan can spur a political solution. Washington called a reported shipment of Russian arms to Syria "reprehensible" although not illegal.
"The Russians keep telling us they want to do everything they can to avoid a civil war because they believe that the violence would be catastrophic," Clinton said.
"I think they are in effect propping up the regime at a time when we should be working on a political transition."
British Foreign Secretary William Hague said Syria was moving towards "all-out civil war or a state of collapse". The European Union was drafting new sanctions against Syria, he added, calling on other nations to pressure Assad.
A bloody crackdown on what began 14 months ago as a peaceful mass uprising has increasingly turned it into an armed conflict between heavily armed forces representing an establishment dominated by Assad's Alawite minority, an offshoot of Shi'ite Islam, and rebel forces drawn largely from the Sunni majority.
Damascus says the rebels are backed by Sunni-ruled Gulf Arab states fearful of the growing influence of Syria's main ally in the region, Shi'ite Iran.
U.N. Secretary-General Ban Ki-moon warned that another massacre like Friday's killing of 108 men, women and children in the western Houla region could pitch Syria into a devastating civil war "from which the country would never recover".
The United Nations has said the army and pro-Assad gunmen were probably responsible for the Houla killings, but Syria said on Thursday that a preliminary investigation had shown that anti-government armed groups carried out the killings with the aim of encouraging foreign military intervention.
Washington's U.N. ambassador, Susan Rice, said Syria's version of what had happened in Houla was "another blatant lie". The massacre led a range of Western countries to expel senior Syrian diplomats and to press Russia and China to allow tougher action by the U.N. Security Council.
Syria's main rebel commander, Colonel Riad al-Asaad, urged Annan to declare that his peace plan had failed.
"There is no deadline, but we want Kofi Annan to issue a declaration announcing the failure of this plan so that we would be free to carry out any military operation against the regime," Turkey-based Asaad told Al Jazeera television, contradicting rebels inside Syria who issued a 48-hour ultimatum on Wednesday for Assad to abide by Annan's plan.
Annan's spokesman said it was not for the peace envoy to declare defeat.
"The Annan plan does not belong to Kofi Annan. It belongs to the parties that have accepted it and the international community that has endorsed it," Ahmad Fawzi told Reuters.
"So a failure of the Annan plan would be the failure of the international community to solve this peacefully ... If anyone has a better plan, they should come up with it."
The United Nations says Assad's forces have killed more than 9,000 people since the start of the uprising. Syria blames Islamist militants for the violence and says 2,600 soldiers and police have been killed.
Rebel leader Asaad said his fighters had so far honoured Annan's plan. But activists have reported frequent attacks by militants and army defectors on government forces since the April 12 ceasefire agreement.
The Syrian Observatory for Human Rights, a British-based network that collates reports of violence in Syria, said 11 bodies had been found outside the town of al-Qusair - killings that a Syrian television station blamed on "terrorist groups".
At least one person was killed and dozens were wounded in artillery and rocket bombardment in the Houla region on Thursday following rebel attacks on soldiers and pro-Assad 'shabbiha' militiamen, opposition activists said.
Russian President Vladimir Putin flies to Berlin and Paris on Friday for talks that European leaders may hope to use to lean on him to loosen Moscow's strategic links to Assad.
Russia has sought to justify its weapons deliveries to Syria, saying government forces need to defend themselves against rebels receiving arms from abroad. Damascus says Qatar, Saudi Arabia and Libya are among the countries helping the rebels.
The United States and the EU have suggested a U.N. arms embargo, but that would need the consent of Russia and China, which have so far resisted tougher action at the Security Council.
China said it still had faith in the Annan plan, despite the "pain and sadness over what happened in Houla".
"Annan's efforts are facing difficulties but no one can deny that they are making progress in some respects," Foreign Minister Yang Jiechi said.
"We knew from the beginning that his path would not be strewn with flowers."
Annan met Jordan's King Abdullah in Amman to discuss the regional impact of the Syrian crisis, before flying to Lebanon where he met President Michel Suleiman, telling his interlocutors he had urged Assad to "take bold steps now to end the violence" and implement the peace plan, his spokesman said.
Lebanese Prime Minister Najib Mikati visited Turkey for talks with his Turkish counterpart Tayyip Erdogan on the fate of a dozen Shi'ite pilgrims taken hostage last week in northern Syria, shortly after crossing the border from Turkey.
Syrian rebels in Aleppo province said in a statement that the hostages were in good health and suggested that some had participated in fighting the rebellion.
They demanded an apology from Hezbollah chief Sayyed Hassan Nasrallah, an ally of Assad, for remarks on Syria he made in a speech last week. (Additional reporting by Laila Bassam and Oliver Holmes in Beirut, Khaled Yacoub Oweis in Amman, Ben Blanchard in Beijing, Seda Sezer in Istanbul, Douglas Hamilton in Tel Aviv; Writing by Robin Pomeroy; Editing by Kevin Liffey)