The 72-39 vote on Monday removed what Sharon considered a delaying tactic by rightists opposed to his Gaza plan.
Legislators were to begin debate later on Monday on the 2005 budget, with approval expected this week, clearing the last serious hurdle to the pullout.
Some rightist lawmakers had pushed for a nationwide ballot over Sharon's objections in the hope it could delay or stop the evacuation of all 21 Jewish settlements in the Gaza Strip and four of 120 in the West Bank starting this July.
But political analysts had predicted the referendum bill, sponsored by ultra-nationalists opposed to ceding an inch of territory Israel captured in the 1967 Middle East war, had almost no chance of passing in the full legislature.
The referendum bill was approved by a parliamentary committee in a stormy session last week after an ultra-Orthodox rabbi, whose constituency includes religious settlers, ordered his party's representative to vote in favour of the bill.
Polls show most Israelis back
Sharon's plan to leave Gaza
Opinion polls show a majority of Israelis support Sharon's plan to leave Gaza to "disengage" from conflict with the Palestinians, suggesting he would win a referendum.
But Sharon rebuffed the idea of a nationwide ballot because he saw it as a stalling manoeuvre by foes of the Gaza withdrawal. Parliament has already endorsed Sharon's plan.
Israel has never staged a plebiscite before and arrangements for one could take months, jeopardising the Gaza timetable.
Political analysts had expressed concern that such a move could set a dangerous precedent whereby the elected government is bypassed by a national vote on controversial issues, hampering its ability to govern.