Defying pressure from different countries, Israel has been conducting military operations in Rafah, which is packed with people who have fled fighting elsewhere in Gaza.
Algeria called an urgent UN Security Council meeting on Tuesday after an Israeli strike killed 45 people at a tent camp in Rafah for displaced people on Sunday, drawing international condemnation.
The draft resolution, which draws on last week's ruling by the International Court of Justice, "decides that Israel, the occupying power, shall immediately halt its military offensive and any other action in Rafah."
It also "demands an immediate ceasefire respected by all parties and also demands the immediate and unconditional release of all hostages."
A civil defense official in Gaza said another Israeli strike on a displacement camp west of Rafah on Tuesday killed at least 21 more people.
Algeria's UN Ambassador, Amar Bendjama, has not specified when he hopes to put the draft resolution to a vote.
"We hope that it could be done as quickly as possible because life is in balance," said Chinese ambassador Fu Cong, expressing hope for a vote this week.
"It's high time for this council to take action. This is a matter of life and death. This is a matter of emergency," the French ambassador, Nicolas de Riviere, said before the council meeting.
The council has struggled to find a unified voice since the war broke out with the October 7 Hamas attack on Israel, followed by Israel's retaliatory campaign.
After passing two resolutions centered on the need for humanitarian aid to people in Gaza, in March the council passed a resolution calling for an immediate ceasefire — an appeal that had been blocked several times before by the United States, Israel's main ally.
During its October 7 cross-border attack on Israel, that led to another round in the Israeli-Palestinian conflict, Hamas militants took 252 hostages, 121 of whom remain in Gaza, including 37 the army says are dead.
Washington, frustrated with how Israel is waging the war and its mounting civilian death toll, finally allowed that resolution to pass by abstaining from voting.
Asked about the new Algerian draft resolution, US Ambassador Linda Thomas-Greenfield said, "We're waiting to see it, and then we'll react to it."