Prime Minister David Cameron made the comments to the UK parliament on Wednesday.
Assange faces a rape allegation in Sweden, but has been inside the embassy for more than three and a half years in a bid to avoid extradition to the Nordic country.
The 44-year-old Australian fears deportation from Sweden to the United States over Wikileaks' release of 500,000 secret military files.
A United Nations panel last week found the anti-secrecy campaigner had been arbitrarily detained by Britain and Sweden.
"I think this was a ridiculous decision," Cameron said in the House of Commons in London.
"You've got a man here with an outstanding allegation of rape against him. (…) He barricaded himself into the Ecuadoran embassy and yet claims he was arbitrarily detained. The only person who detained himself – was himself."
"And so what he should do is come out of that embassy and face the arrest warrant that is against him."
He stressed that the allegation against Assange was in Sweden, "a country with a fair reputation for justice".
"He should bring to the end this whole sorry saga."
READ ALSO: British press takes swipe at Assange and UN
Swedish PM Stefan Löfven and Cameron in London last year. Photo: AP Photo/Tim Ireland
The Swedish prosecutor in charge of the investigation said on Tuesday that she still aims to question former computer hacker Assange inside the embassy, despite the UN report.
Story continues below…
"It does not change my earlier assessments in the investigation," Marianne Ny said in a statement.
She said she was "currently working on a renewed request to interview Julian Assange at Ecuador's embassy in London".
Swedish Prime Minister Stefan Löfven said on Tuesday that he would not comment on the judicial process, but told the TT newswire that he believed the choice not to abide by the UN panel's ruling would not have a negative influence on Sweden's global reputation.
"No, I don't think so. We have a legal system which we respect and they will decide on this issue," he said.