The so-called Nakba Law, using the Arabic word for "catastrophe" which is how many Palestinians regard the founding of Israel, passed by a vote of 37 to 25 after an angry debate among right and left-wing lawmakers.

Civil rights groups have denounced the measure as an effort to restrict freedom of expression to Arabs, who make up about a fifth of Israel's predominantly Jewish population.

The law would enable the withholding of funds to public institutions deemed to be involved in publicly challenging the founding of Israel as a Jewish state or any activity "denying the existence of Israel as a Jewish and democratic state."

Many Israeli Arabs, as relatives of Palestinians who remained in what is now Israel when hundreds of thousands of others were driven away or fled during a 1948 war over Israel's establishment, question whether Israel should be a Jewish state. Unlike Palestinians living in territory Israel captured in a 1967 war, Israeli Arabs are fully enfranchised though many complain of discrimination.

Reuters