The Jerusalem Post said the measure was designed to make it more difficult for Palestinians married to Israeli Arabs to obtain citizenship.
"Dangerous" and "racist"
The new provision is actually an amendment to the Citizenship and Entry into Israel Law passed in 2003, which makes it all but impossible for Palestinians to obtain Israeli citizenship.
That law was originally passed as a temporary emergency measure, but the Knesset has repeatedly extended it, despite a number of legal challenges from Israeli NGOs.
The law means that many Palestinians married to Israelis actually live in Israel illegally.
Israel's Association for Civil Rights called the newest amendment "dangerous" and "racist". Adalah, an Israeli NGO, said the changes would prevent families from reunifying and force non-Jews to embrace Zionism.
The Israeli newspaper Haaretz condemned the amendment in an editorial, calling it an attempt to "light a societal fuse".
Meanwhile, the government is also moving forward with a plan to seize thousands of abandoned properties in occupied East Jerusalem, according to a Haaretz report.
Yehuda Weinstein, the Israeli attorney general, told the supreme court that the government plans to seize land from people who fled Israel when it became an independent state in 1948.
The seizure would also apply to land owned by Palestinians who live in the occupied West Bank or the Gaza Strip.
The court will have to decide whether or not to approve the seizure.