The Britain-based Syrian Observatory for Human Rights said that more than 90 people had been killed in the Houla area in the 24 hours since midday Friday.
A local activist giving his name as Abu Yazan reached via Skype said 12 people died in shelling and 106 were killed when pro-regime thugs known as shabiha stormed the area.
That death toll is one of the highest for any single event since the popular uprising against Bashar Assad began in March 2011. The U.N. says more than 9,000 people have been killed, most of them civilians.
The new violence in Houla is also a further blow to a U.N. peace plan for Syria that was supposed to start with a cease-fire between government troops and rebels on April 12 but has never really taken hold.
More than 250 U.N. observers are now deployed in Syria to oversee the truce, and a spokesman for the team said Saturday that observers were heading to Houla.
A local activist reached via Skype said regime forces started shelling the village of Houla, about 40 kilometers (25 miles) northwest of the city of Homs in west-central Syria following an anti-regime demonstration following Muslim prayers on Friday. Twelve people were killed in the shelling, said the activist, who gave his name as Abu Yazan.
Later, pro-regime thugs known as shabiha stormed the village of Taldaw, just south of Houla, raiding homes and shooting at civilians.
"They killed entire families, from parents on down to children, but they focused on the children," he said.
Amateur videos posted online showed many children among the dozens of dead laid out in different rooms and covered with sheets and blankets. One video showed 14 dead children lined up on a floor, shoulder to shoulder.
Abu Yazan said most residents were fleeing the area Saturday, fearing further killings.
Activist claims and videos could not be independently verified. The Syrian government bars most media from operating inside the country.
News of the killings elicited harsh condemnations from anti-regime groups, many of which have expressed frustration with international reluctance to intervene in Syria's conflict.
Bassma Kodmani of the exile opposition Syrian National Council called on the U.N. Security Council "to examine the situation in Houla and to determine the responsibility of the United Nations in the face of such mass killings, expulsions and forced migration from entire neighborhoods."
The London-based Syrian Observatory for Human Rights released an unusually harsh statement, saying Arab nations and the international community were "partners" in the killing "because of their silence about the massacres that the Syrian regime has committed."