The Israeli cabinet on Sunday approved a controversial bill that would anchor into Israeli law the status of the state of Israel as the nation state of the Jewish people Anadolu Agency reported.
The bill, which passed the cabinet vote by 15-7 in its favor, will later be presented to the Knesset for approval, according to Israel's Channel 7.
The cabinet meeting witnessed heated discussions over the bill, which was backed by several right-wing lawmakers from the parties of Likud and Yisrael Beituna.
During the meeting, Israeli Prime Minister Benjamin Netanyahu criticized Justice Minister Tzipi Livni for what he described her opposition to the bill, the report said.
Over 1.6 million Arabs are currently residing in Israel, constituting over 20 percent of Israel's 8 million citizens, according to the Israel Statistical Association.
Israel's proclamation as a Jewish state has been a point of contention at the latest round of U.S.-mediated peace talks with the Palestinians.
Palestinian President Mahmoud Abbas has repeatedly expressed his refusal to compromise the longstanding Palestinian stance against recognizing Israel as a Jewish state.
Palestinians fear that identifying Israel as such will cancel the right of return of Palestinian refugees or the right of compensation to those affected by the creation of Israel in 1948.
Peace talks between Israeli and Palestinian negotiators collapsed in April over Israel's refusal to release a fourth batch of Palestinian prisoners despite earlier pledges to do so.
The talks aims to find a solution to the Palestinian-Israeli conflict, the roots of which date back to 1917, when the British government, in the now-famous "Balfour Declaration," called for "the establishment in Palestine of a national home for the Jewish people."
Jewish immigration rose considerably under the British administration of Palestine, which was consolidated by a League of Nations "mandate" in 1922.
In 1948, with the end of the mandate, a new state - Israel - was declared inside historical Palestine.
As a result, some 700,000 Palestinians fled their homes, or were forcibly expelled, while hundreds of Palestinian villages and cities were razed to the ground by invading Jewish forces.
The Palestinian diaspora has since become one of the largest in the world. Palestinian refugees are currently spread across Jordan, Lebanon, Syria and other countries, while many have settled in refugee camps in the Palestinian West Bank and Gaza Strip.
Israel went on to occupy East Jerusalem and the West Bank during the 1967 Middle East War. It later annexed the holy city in 1980, claiming it as the capital of the self-proclaimed Jewish state - a move never recognized by the international community.
Palestinians want the establishment of an independent Palestinian state in the Gaza Strip and West Bank, with East Jerusalem as its capital.
For many Palestinians, the right to return to their homes in historical Palestine - as enshrined in UN General Assembly Resolution 194 - remains a key demand.