The non-binding debate was requested by South Africa's ambassador and spokesman for the non-aligned nations movement, Dumisani Kumalo, to give countries without seats on the Security Council a platform to express their views.
The five permanent members of the Council are still divided over the prospect of military action, with Russia saying the latest American draft remains unacceptable.
Moscow's view is backed by French President Jacques Chirac who is reported as saying he is "completely hostile" to any automatic authorisation of force if Iraq contravened a new resolution.
UN Secretary General Kofi Annan urged the meeting to work towards a new resolution - without which inspectors have now said they will not return to Baghdad and their mission of assessing whether Iraq is developing weapons of mass destruction.
The BBC's world affairs correspondent at UN headquarters, Mark Doyle, said most the speakers from the Muslim world have emphasised the importance of broad-based UN action.
Our correspondent says that is diplomatic speak for trying to rein in the US and try everything short of military action first.
The ambassador of the Arab League said the West was applying double standards because Israel had weapons of mass destruction and was a threat to the stability of the Middle East region.
The Iraqi ambassador to the UN, Mohamed Al-Douri, accused the US of aiming to colonise Iraq in order to control the region's oil reserves.
"The United States wants the United Nations to give it a blank cheque to occupy Iraq, and not only Iraq but the entire Arab Middle East," Mr Al-Douri said.
Several speakers quoted the UN charter's opening words, saying the organisation was founded "to save succeeding generations from the scourge of war".
Growing division
But Australia gave strong support to the American position, saying Iraq had broken many promises in the past.
This debate, which is scheduled to last two days, will not be followed by a resolution vote - that task is left to the Security Council.
If a Security Council resolution is to pass, it must avoid a veto from any of the permanent members - the US, Russia, France, Britain and China.
But the Council itself is having trouble reaching a consensus.
In Washington, US President George W Bush has signed into law a Congressional resolution authorising him to launch military action.
But Russia has now come down firmly against US and moved to the side of France - which wants one resolution to get the inspectors back in and a second threatening force only if they are not allowed to do their work.
Our correspondent says that on the evidence of Wednesday's debate, the broader membership of the UN appears to lean towards the French tactics.