The Saudi-led coalition fighting rebels in Yemen said Sunday it will investigate an air raid that killed more than 140 people, after Washington announced it was reviewing support for the alliance.

The Iran-backed Houthi rebels have blamed the Arab coalition for Saturday's attack, one of the deadliest since it launched a military campaign against the Shiite insurgents in March last year.

The attack could further sour US-Saudi ties already strained over the coalition's military intervention which is suspected of causing almost half of the more than 4,000 civilian deaths in Yemen's conflict.

After initially denying any responsibility, the coalition said it was ready to launch a probe into the "regrettable and painful" strike, which the UN said also wounded more than 525 people.

"The coalition will immediately investigate this case along with... experts from the United States who participated in previous investigations," it said in a statement carried by the Saudi Press Agency.

"The coalition is also willing to provide the investigation team with any data and information related to its military operations today, at the incident's location and the surrounding areas," it said.

The UN said aid workers were "shocked and outraged" by the attack that hit a community hall in Sanaa where mourners had gathered.

The insurgent-controlled news site sabanews.net said coalition planes hit after hundreds had gathered to mourn the death of the father of rebel interior minister Jalal al-Rowaishan and denounced the "massacre".

The Houthis did not say if Rowaishan was present in the building at the time of the attack, nor did they indicate if other senior figures were attending the funeral.

But Sanaa mayor Abdel Qader Hilal was among those killed, according to the rebels' Almasirah television.

Riyadh's key ally Washington warned it had launched an "immediate review" of support to the Arab coalition.

"We are deeply disturbed by reports of today's air strike on a funeral hall in Yemen, which, if confirmed, would continue the troubling series of attacks striking Yemeni civilians," White House National Security Council spokesman Ned Price said in a statement.

"In light of this and other recent incidents, we have initiated an immediate review of our already significantly reduced support to the Saudi-led coalition and are prepared to adjust our support so as to better align with US principles, values and interests," Price said.

However, the US Fifth Fleet spokesman Lieutenant Ian McConnaughey said mid-August that the reassignment of personnel, around June, occurred because "there was not the same sort of requests coming in for assistance" from the Saudis.

He added that the reassignment of personnel does not affect their ability to support the Saudis and is a more efficient allocation of resources.

The US has sponsored the Saudi-led coalition with arms sales and provided logistical and intelligence support since its launch in March 2015. 

US Secretary of State John Kerry said late August in Jeddah that Saudi Arabia has the right for self-defense in the backdrop of missiles being launched by the Iran-backed militias into its territories, Al Arabiya reported.