Human rights groups said Tuesday they would ask Israel's supreme court to overturn a law banning boycotts of products from Jewish settlements, DPA reported.
Physicians for Human Rights Israel, the Adalah Legal Centre for Arab Minority Rights, the Public Committee Against Torture in Israel (PCATI) and Coalition of Women for Peace said they would submit a petition against the "unconstitutional" law in the coming days.
Israel's parliament passed the Boycott Bill in a 47-38 vote late Monday.
The remaining 35 members of the 120-seat Knesset abstained, including the Independence faction of Defence Minister Ehud Barak, who insisted the law was "worthy," but warned it would harm Israel.
The law makes calling for a boycott against Israel a civil offence.
Settlers can from now on demand damages from anyone who makes a public call for a boycott against buying their products.
It was passed despite a warning by the chamber's legal adviser that it is unconstitutional because it violates freedom of expression.
Israel's attorney general, by contrast, insisted the law was constitutional.
"There is a serious problem with this law," said Idan Ring, a spokesman for the coalition of rights group petitioning the supreme court.
He said it violated the rights especially of Palestinian residents of East Jerusalem, as the law in essence compelled them to "cooperate" with the Israeli occupation.
Israel annexed East Jerusalem following the 1967 war in which it captured the West Bank from Jordan and the Gaza Strip from Egypt. More than a decade later, it extended Israeli law over it, meaning residents of the city's eastern part are bound by it. By contrast, Israeli does not apply to Palestinians living in the West Bank.
"It is really absurd that victims of the occupation" should be paying damages to the occupiers, if they should organize a boycott of settlement products, he told the German Press-Agency dpa.
"Boycotts are a nonviolent and legitimate tool acceptable all over the world as a means to promote various agendas," said also the Association for Civil Rights in Israel (ACRI) in a statement. The Israeli Peace Now organization had urged Israelis to sent letters to lawmakers, urging them to vote against the bill.
Israeli opposition leader Tzipi Livni blasted the law as "bad" and as "unjust, unconstitutional and meant to prevent a legitimate debate in Israel."
Her 28-seat Kadima party voted against, but one faction member, Otniel Schneller from a settlement outside Jerusalem, called the law "excellent," arguing it actually protected against racism.
People should not be boycotted because of their place of residence, he told Israel Radio.
Israeli Prime Minister Benjamin Netanyahu, of the 27-seat Likud party, and nine ministers of his cabinet abstained.