The resolution, seen by the BBC but not yet officially released, also said the League was ending all diplomatic co-operation with Syria.
Damascus’s envoy in Cairo, Yusuf Ahmed, said the plan “reflected the hysteria of these governments”.
The plan comes as the UN General Assembly prepares to debate Syria.
UN human rights chief Navi Pillay, who has been sharply critical of the actions of President Bashar al-Assad’s government, is expected to address the assembly.
The Arab League also said it would be “opening communication channels with the Syrian opposition and providing all forms of political and material support to it”, and urged opposition groups to be more united.
The League’s moves come a week after a UN Security Council resolution on Syria, which would have endorsed a previous Arab League peace initiative, was vetoed by Russia and China.
The BBC’s Jeremy Bowen in Cairo says the new resolution contains the toughest language on Syria by the Arab League so far and makes it much more likely that the issue will return to the Security Council.
The fact that they are considering these moves shows the extent of the Syrian regime’s isolation, our correspondent adds.
But, he says, it remains to be seen whether Moscow will continue to lend its support to its old allies and trading partners.
The League’s resolution also formally ends the observer mission it sent to Syria in December. It was suspended in January amid criticism that it was ineffective in the face of continuing violence.
The head of that mission, the controversial Sudanese General Mohammed al-Dabi, had submitted his resignation on Sunday.
Earlier, al-Qaeda leader Ayman al-Zawahiri backed the Syrian uprising in a video message, telling the opposition not to rely on the West or Arab countries for support.
There have been reports that US officials suspect al-Qaeda involvement in two deadly blasts in the second city of Aleppo last week.
Meanwhile, fresh violence in the Syrian city of Homs was reported on Monday.
“Tank shelling has been non-stop on Baba Amro and the bombardment on al-Waer [district] began overnight,” activist Mohammad al-Hassan told Reuters.
Following after a brief lull in fighting, at least four people were killed in the Baba Amr neighbourhood of the city on Sunday, the Syrian Observatory on Human Rights said.
At least 35 were reported dead on Saturday.
Activists say more than 400 people have been killed since security forces launched an assault on opposition-held areas on the city earlier this month.
Human rights groups say more than 7,000 have died throughout Syria since March. The government says at least 2,000 members of the security forces have been killed combating “armed gangs and terrorists”.
Syria restricts access to foreign media and it is not possible to verify casualty figures.