Middle East mediators see the Gaza pullout as a springboard toward peace negotiations whose prospects have been revived by the 8 February ceasefire summit between Israeli Prime Minister Ariel Sharon and new Palestinian President Mahmud Abbas.
Sharon secured the 95-40 vote on Wednesday with the help of left-wing legislators inside and outside his "unity" coalition to override a split within his right-wing party and growing protests by the nationalist Jewish settlers.
One more serious obstacle lurks in a pending state budget vote for which Sharon is still trying to assemble a majority to defeat Likud rebels and opposition rightists bent on toppling him and forcing early elections to scuttle the Gaza plan.
Sharon's government would fall automatically if the budget is not passed by 13 March.
Some 8,500 settlers in Gaza and a few hundred of more than 230,000 in the West Bank are to be evacuated in several stages from July to September this year.
Jewish Gaza settlers are waging
protests against evacuation
Many of the Gaza settlers vow to resist and are waging a protest campaign against the plan.
The legislation provides for a total of 3.8 billion shekels, or $870 million, in compensation. Payments per family would range from $200,000 to $500,000, depending on size of assets.
Sharon's government has said it will encourage uprooted settlers to relocate to underdeveloped parts of Israel such as the Negev desert, but that it could not stop some going to the occupied West Bank if they chose.
Sharon aims to keep large settlement blocs in the West Bank for good.
Palestinians consequently fear the Gaza pullout will come at the expense of a tighter Israeli grip on the West Bank, dimming their hope for a viable independent state.
Meanwhile, Aljazeera's correspondent in Ram Allah said a group of Jewish settlers reacted to the news by setting ablaze five cars belonging to Palestinians in the Hawara township, south of Nablus.
One of the cars was owned by Brigadier Ahmad Abu Humaid, chief of Palestinian police in the Tul Karim region.