The Palestinian Legislative Council approved the new law by a majority of 43 against 13, with 30 other members absenting themselves or abstaining from the voting.
According to the new amended law, half of the 132 seats making up the Palestinian parliament will be elected in local or regional electoral districts, while the other half will be elected as party candidates at the national level.
It is not clear when the new date for the elections will be designated.
However, House Speaker Rawhi Fattouh was quoted on Saturday as saying that elections will be held early next year.
The Islamic Resistance group, Hamas, the main opposition party, has welcomed the approval of the new law.
Hamas spokesman in Gaza Sami Abu Zuhri termed the approval a "step in the right direction".
"Hamas welcomes this step and hopes the Palestinian Authority will set up a new date for the elections as soon as possible," Abu Zuhri said in Gaza.
Abu Zuhri added that Hamas was more concerned about holding the election than passing the new amended law, suggesting that the movement was worried about additional procrastination by the Palestinian Authority (PA) with regard to organising the elections.
The PA had designated 17 July as the date for organising polls to elect a new parliament that would replace the existing one, appointed in 1995 when the PA was established.
"Hamas welcomes this step and hopes the Palestinian Authority will set up a new date for
the elections as
soon as possible"
Sami Abu Zuhri,
Hamas spokesman in Gaza
However, due to legal and procedural complications, and especially because Fatah, the de facto ruling party of the PA, feared that Hamas might defeat it if elections were to be held at the date assigned, the Fatah legislative council decided to postpone the elections until further notice.
Last month, the PA leader Abbas was forced to succumb to Fatah pressure and decided formally to postpone the elections.
Fatah, Hamas and the rest of the Palestinian groups agreed during a meeting in Cairo in March to organise general elections as part of a package agreement that included a de facto ceasefire with Israel which effectively ended four years of violence between the two sides.
Meanwhile, according to Israeli press sources, Israeli leaders will demand that Hamas be barred from participating in Palestinian elections as long as it refuses to recognise Israel.
The Israeli newspaper Haaretz reported on Saturday that the recent decision by Palestinian President Abbas to postpone the elections was due, at least in part, to Israeli reservations about Hamas.
However, a PA official dismissed the reports as a "red herring" aimed at distracting attention from Israel's "wanton violation of the terms of the road map and continued theft of Palestinian land".
Hamas has become a major
force in Palestinian politics
"There are several political parties in Israel that call for the expulsion and even extermination of the Palestinian people and nobody is demanding their exclusion from Israeli politics," Abdullah Abdullah, a high-ranking Palestinian Foreign Ministry official, told Aljazeera.net
"We have one Hamas, but Israel has numerous Hamases. Let them first take care of their extremists, and we will take care of ours."
In other developments, al-Quds and al-Aqsa Brigades have claimed joint responsibility for an attack on an Israeli convoy in the settlement of Kfar Darom in the southern Gaza Strip on Saturday
Al-Quds Brigades, the military wing of Palestinian movement Islamic Jihad, said one of its members, Anwar al-Atawi, was killed and another withdrew after being wounded during clashes with Israeli forces.
Anwar Al-Atawi was killed during
an assault on a Gaza settlement
In a separate incident, Aljazeera's correspondent in the Gaza Strip reported that Israeli occupation forces injured two Palestinians near the settlement of Gush Katif south of the Gaza Strip.
The correspondent said the incident was caused by random gunfire by both settlers and Israeli soldiers towards Palestinian houses in Khan Yunus.
Aljazeera's correspondent also reported that two mortar shells fell on the Israeli settlement of Moorage, north of the Gaza city of Rafah.
No word was said about casualties among Israeli settlers.