The EU, as well as both Jewish and non-Jewish Human Rights Groups, have all condemned the bill, comparing Israel to an "Apartheid State".
An official at the ministry told the official SANA news agency the law was an attack on Palestinian rights to their homeland and a violation of global law.
The Jewish Nation-State Law also specifies that the right to realize national self-determination in the State of Israel - the right to decide upon self-governance and what it looks like - is uniquely held by the Jewish people.
Arab citizens account for some 17.5 per cent of Israel's more than eight million population and have long complained of discrimination.
The legislation further states that a "united Jerusalem" is the country's capital and that Hebrew is its official language, stripping Arabic of its earlier designation as an official language while recognizing its "special status".
Clauses that were dropped after political wrangling would have enshrined in law establishment of Jewish-only communities.
In June the Knesset, Israel's parliament, shot down a bill proposed by Balad, one of three Arab parties on the Joint Arab List, seeking more equal rights for minorities including Palestinians.
Others said it neglects to specify equality and Israel's democratic character, implying that the country's Jewish nature comes first. He called its approval a "decisive moment" in Israeli history.
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He served in the House in the 1980s and the Senate in the 1990s and 2010s and was the USA ambassador to Germany from 2001 to 2005. He said when he has frustrating days, he reminds himself about why he agreed to accept the job and what he hoped to accomplish.
"The 'nation-state" bill is the exact definition of Apartheid...
"The law will also back discrimination against Arab citizens who can be legally prevented from residing in Jewish-only areas", Zahalka added. That means broaching uncomfortable topics, embracing bold new ways to engage with Israel, and partnering with Israelis who seek our help.
"We call on the worldwide community to react against this injustice that happened before the eyes of the whole world", he added.
Israel's Palestinian population comprises mainly the descendants of those who remained on their land since 1948, the time of the carving of the modern state of Israel from historic Palestine.
The online Discriminatory Laws Database, managed by Adalah-The Legal Center for Arab Minority Rights in Israel, counts some sixty-five Israeli laws that discriminate directly or indirectly against Palestinians.
But American Jewish organisations expressed their disapproval of the law.
Egypt in 1979 became the first Arab country to forge a peace treaty with Israel under the US -sponsored Camp David accord that provided for the Jewish state to withdraw from the Sinai Peninsula.