The law - approved by the Chinese parliament on Thursday has sparked a new wave of mainland anti-China protests in Hong Kong.
On Wednesday, US Secretary of State Mike Pompeo said developments in Hong Kong showed the country did not have "autonomy" from mainland China.
Britain on Thursday said visa rights for 300,000 citizens' passport holders living abroad (ie in Hong Kong), would be expanded "to British citizenship" if China did not suspend its planned security law.
The Chinese Parliament has approved a National Security Bill for Hong Kong that will punish anyone who opposes Beijing's authority in the region.
The US and its allies said in a joint statement that the implementation of the law was carried out by Beijing directly rather than through institutions in Hong Kong. The bill will "limit the freedom of the people of Hong Kong" and "dramatically erode Hong Kong's autonomy and the system that makes it very prosperous".
It is also said to be in conflict with China's international obligations contained in the Sino-British declaration, which regulates Hong Kong's return to China, and it undermines the principle of "one country, two systems" and "increases the potential for persecution in Hong Kong due to political crimes".
The allied countries also said they were "very concerned" that the new law would deepen divisions in Hong Kong, which had previously sparked a wave of protests and repeated clashes because of tensions with mainland China.
The US and its allies urged China to work with the government and people of Hong Kong and to find "mutually acceptable agreements".
Meanwhile, Japan said Hong Kong was "a very important partner" and democracy and stability there must be maintained.
The law raises deep concern because it could end Hong Kong's unique status.