"I also appeal to the armed opposition to cease acts of violence," he added.
Talking to reporters in Damascus, Annan was asked what he thought would happen in Syria if the peace plan was not implemented.
"If the plan is not implemented, I would worry for the future of Syria. I would worry about stability in the country. ... If we do not (implement the plan), may God help us," he said.
"Words are wonderful, but action is better. What is important is demonstrate through action a real commitment to the plan and this is what the international community is asking for now: action, not words," he said.
Al-Assad told Annan that "terrorist groups" have escalated operations, including killings and kidnappings, in recent days, and he stressed the urgency of getting countries that are "financing and harboring terrorist groups" to commit to Annan's plan, Syrian state-run TV reported.
Residents in Houla say Syrian regime forces terrorized the town, a suburb of the anti-government bastion of Homs.
An 11-year-old survivor recalled his experience.
"They were talking to my mom. I'm not sure what happened but they shot her five times. They shot her in the head. Then he turned and shot my sister, Rasha, in the head. Then he shot my brother, Nader, in the neck and back," the boy said.
Months of diplomatic efforts and economic sanctions have yet to quash the violence, and anger over perceived inaction by world leaders boiled over after the Houla massacre, which the United Nations said left 108 people dead.
Horrific images of dozens of mutilated children's corpses in Houla prompted a rare moment of unity Sunday from the U.N. Security Council.
Even Russia, the staunchest defender of the Syrian regime on the council, signed on to a statement that condemned the Syrian government for its "outrageous use of force against (the) civilian population."
Russian Foreign Minister Sergei Lavrov, in a conversation with Annan, "expressed grave concern about the tragedy in Houla and emphasized that all sides in Syria must give up violence in order to avoid similar incidents in the future," according to a statement from the ministry. "An objective and independent investigation of all circumstances of the tragedy must be done under the U.N. Mission in Syria," the statement said.
Yet few Middle East watchers predict the Houla massacre will break the diplomatic deadlock that has cemented itself around Syria for a year.
Unlike in Libya, where NATO-led airstrikes contributed to deposing longtime ruler Moammar Gadhafi, al-Assad has powerful regional allies in his corner: Iran, Russia and, to an extent, China.
Syria also has "five times more sophisticated air defense systems than existed in Libya, covering one-fifth of the terrain," Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey testified before Congress in March.
But a former Syrian general said the country's capabilities were exaggerated.
"It is good to face civilians or light armed freedom fighters ... but when it faces a superior power it will collapse right away. I'm saying that with all sadness because this is the army I served like for 27 years, but this is not the army of the people anymore ... It's the army of the regime itself," Akil Hashem told CNN's Christiane Amanpour.
U.N. officials say more than 9,000 people, most of them civilians, have been killed and tens of thousands more have been uprooted since the crisis began in March 2011. Opposition groups report a death toll of more than 11,000 people.
CNN cannot confirm death tolls and reports of violence from Syria, as the Syrian government limits access by foreign journalists.