"You passed an apartheid law, a racist law", MPs Ahmed Tibi and Ayeda Touma-Souliman from The Joint List, a coalition of Arab-dominated parties in the Israeli Parliament, shouted to the Israeli leader as he lauded the freshly-approved legislation.
"It is a decisive moment in the history of the state of Israel that inscribes in stone our language, our anthem and our flag", Israeli Prime Minister Benjamin Netanyahu said after the vote on the legislation, backed by his right-wing government.
It states that "Israel is the historic homeland of the Jewish people and they have an exclusive right to national self-determination in it". One clause of the law downgrades the Arabic language from official to "special" standing, but also cryptically stipulates that "this clause does not harm the status given to the Arabic language before this law came into effect". He added: "Israel is the nation state of the Jewish people, which honors the individual rights of all its citizens".
The bill has bitterly divided Israeli lawmakers, with some arguing that the law will institutionalise "apartheid" rule in Israel.
Adalah, the Legal Center for Arab Minority Rights in Israel, said the nation-state law features "key elements of apartheid".
A range of opposition politicians denounced the vote. "The damage that will be done by this new Nation-State law to the legitimacy of the Zionist vision and to the values of the state of Israel as a democratic-and Jewish-nation is enormous".
"This is a defining moment for the State of Israel", said Netanyahu, speaking in the plenum after the law was passed.
Arab citizens account for some 17.5 percent of Israel´s more than eight million population.
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"This is our state - the Jewish state".
Benny Begin, the son of former Israeli prime minister Menachem Begin, and the founder of Mr Netanyahu's ruling Likud party, abstained from voting, warning of the party's growing disconnect from human rights.
American Jewish organisations also expressed disapproval.
"If there had been another paragraph that also gives full equality to all citizens of Israel, then I would have been a lot more relaxed", he said.
About 20% of Israel's population of nine million are Arab - with an additional 2.8 million Palestinians living in the Israel-occupied West Bank and about 1.7 million in the Gaza Strip.
Lawmakers had removed the most contentious clause of the bill on Sunday which would have allowed the establishment of "separate communities" and which critics had called racist.
The American Jewish Committee, a group representing the Jewish diaspora, said it was "deeply disappointed", saying the law "put at risk the commitment of Israel's founders to build a country that is both Jewish and democratic".
The controversial bill underwent a number of last minute changes to soften language following political disputes and objections, including from Israel's president and attorney-general.