Israel, anxious for the international mission to remain in place, worried that the Golan could become a springboard for attacks on Israelis by Islamist militants fighting to oust Syrian President Bashar al-Assad.
"While appreciating Austria's longtime contribution and commitment to peacekeeping in the Middle East, we nevertheless regret this decision and hope that it will not be conducive to further escalation in the region," the Israeli Foreign Ministry said in a statement.?
But the departure of the Austrians, who make up about 380 of the 1,000-member United Nations Disengagement Observer Force (UNDOF), threatens the whole operation.
"Austria has been a backbone of the mission, and their withdrawal will impact the mission's operational capacity," said U.N. spokeswoman Josephine Guerrero.
"The members of the Security Council expressed their deep concern at the risk that all military activities in the area of separation conducted by any actor pose to the long-held ceasefire and the local population," the U.N. council said in a statement.
The Security Council will meet on Friday to discuss the Austrian withdrawal. British Ambassador Mark Lyall Grant, the council president this month, said peacekeeping officials were meeting with contributing countries to see whether any states would be willing to offer troops to replace the Austrians.
"We consider UNDOF to be an extremely important mission," Lyall Grant said. "We support it and we want it to continue."
Anti-Assad rebels briefly seized the crossing between Israel and Syria, sending U.N. staff scurrying to their shelters before Syrian soldiers managed to push them back and reassert their control of Quneitra.
The rebel attack appeared to be an attempt to regain some momentum after Assad's forces, backed by well-trained Lebanese Hezbollah guerrillas, on Wednesday seized control of Qusair, a town on a vital supply route close to Lebanon.
In Washington, U.S. State Department spokeswoman Jen Paski said: "We've been very clear about our concerns over regional instability caused by the crisis in Syria. This is of course another example of that, and we continue to call upon all parties to avoid any action that would jeopardize the long-held ceasefire between Israel and Syria."
Meanwhile, Russia announced it has deployed a naval unit to the Mediterranean Sea in a move President Vladimir Putin said was to defend Russian security, as Moscow faces off with the West over its support for Assad's government.
"This is a strategically important region and we have tasks to carry out there to provide for the national security of the Russian Federation," Putin said.
Syrian government troops and their allies have won a string of successes in recent weeks, boosting Assad at a time when the United States and Russia are struggling to organize a peace conference aimed at ending the civil war that has killed more than 80,000 people.
Looking to ram home their victory, Assad's troops have turned their fire on villages northeast of Qusair, where hundreds of rebels and civilians were holed up, prompting one group of activists to issue a desperate plea for rebel support.
"God has given us the strength to persevere, but until when only God knows. We beg you to move as quickly as possible to rescue us," said a message posted on social networking sites.
Shortly afterwards, Syrian television announced that the army had "restored security and stability" to one of the villages in its sights - Debaa.
France, which earlier this week accused Assad of deploying nerve gas in the civil war, said on Wednesday the situation on the ground needed to be "rebalanced" after the fall of Qusair, but did not say how that could be achieved.
Russia said it was concerned that allegations of gas attacks might be used as a pretext for foreign intervention.
"I do not rule out that somebody wants to use it to state that a red line has been crossed and a foreign intervention is necessary," Russian Foreign Minister Sergei Lavrov told a news conference in Moscow with his German and Finnish counterparts.