The proposal -- denounced by critics as likely to encourage a witch-hunt against leftist groups that campaign for the defence of Palestinian rights -- passed with 50 votes in favour and 43 against following a tense debate.

Two more readings of the bill by the parliament or Knesset are required for it to become law.

Justice Minister Ayelet Shaked who proposed the law argues it will boost transparency as the government seeks to fight foreign interference and attempts to delegitimise the state of Israel. She has insisted it does not target any specific NGO.

The text does not specifically refer to leftist organisations but they are the groups it would impact as right-wing NGOs supporting Israel's occupation of the West Bank tend instead to rely on private donations particularly from the United States.

The bill has sparked international criticism with the US and EU ambassadors to Israel both expressing concern over its implications.