|The new amendment has created divisions between the left and right within Israel [Reuters]
The Israeli cabinet has approved a proposal requiring new immigrants to pledge loyalty to the "Jewish and democratic" state.
The language has triggered charges of racism from Arab politicians who see it as undermining the rights of the country's Arab minority.
It has raised tensions with Palestinians at a time when peace talks are deadlocked over Israel's refusal to extend a moratorium on new building in West Bank Jewish settlements.
The amendment was backed by Yisrael Beitenu, an ultra-nationalist party whose leader, Avigdor Lieberman, has been a vocal critic of Israel's settlement freeze.
Sunday's cabinet vote may be a way to soften Lieberman's opposition to extending the slowdown, though officials have denied there is any connection.
Al Jazeera's Mike Hanna, reporting from Jerusalem, said the bill would become law once approved by a simple majority in the Knesset [parliament].
The Israeli supreme court would then have to adjudicate whether the new language is at odds with the country's basic law, he said.
Binyamin Netanyahu, the Israeli prime minister, had expressed his support for the proposal before the vote.
"The state of Israel is the national state of the Jewish people, and it is a democratic state for all its citizenship," he said. "There is no other democracy in the Middle East. There is no other Jewish state in the world. Unfortunately, there are many today who tried to blur not only the unique connection of the Jewish people to its homeland, but also the connection of the Jewish people to its state."
Speaking to Al Jazeera shortly after the cabinet vote, Shmuel Sandler, a professor at Israel's Bar-Ilan University, said: "You can stay whichever religion you want, whichever nationality. But if you want to become a citizen, you have to take the oath."
But our correspondent said "some have argued that the bill would cast Israel in a bad light in the international community."
The Israeli left has voiced significant opposition to the citizenship bill, even though the Labour party is part of the ruling coalition in Netanyahu's government.
"There is a whiff of fascism on the margins of Israeli society," Isaac Herzog, the social affairs minister, who belongs to Labour, told army radio on Sunday.
"There have been a tsunami of measures that limit rights ... I see it in the halls of the Knesset [parliament], in the commissions and departments responsible for legislation."
Similarly, Dan Meridor, a Likud party member, said the law would exclude 1.5 million Palestinians who are citizens of Israel and will create a rift between them and the state.
Reporting from the West Bank city of Ramallah on the Palestinian reaction to the vote, Al Jazeera's Nour Odeh said: "Defining a state by the specific religious or ethnic background of the majority of its citizens is unprecedented".
Were the bill to be passed by the Knesset, the people immediately affected would be Palestinians in the West Bank and Gaza who either want to marry a Palestinian-Israeli citizen or have already married and are waiting on their papers to be processed, she said.
Earlier, Ahmad Tibi, an Arab member of the Knesset, told Al Jazeera that the bill was aimed at Palestinians - and not at Jewish newcomers to Israel since they already enter on Israel's Jewish Law of Return.
"Palestinians will have to say that this country is for Jews, and Palestinians are only guests. If you are saying you are democratic, you should treat citizens with equality," Tibi said.
He said that Israel was trying to impose this on the Palestinian Authority (PA) as a pre-condition for peace talks.
Direct peace talks between Israel and the PA, under the leadership of Mahmoud Abbas, are currently at an impasse due to Israel's refusal to extend the 10-month freeze.
Recognition of Israel as a Jewish state is one of Netanyahu's principal demands in any eventual peace deal with the Palestinians.
Palestinians have repeatedly rejected Netanyahu's condition as it would amount to an effective renunciation of the right of return for Palestinian refugees.
"The new citizenship law will make it impossible for Palestinian refugees and their descendants to return to their homeland," Marwan Bishara, Al Jazeera's senior political analyst, said.
"That's why such a law also pre-empts the final-status negotiations ... Palestinian refugees cannot vow allegiance to the legitimacy of a Jewish state - that would be de facto vowing allegiance to the Zionism that dispossessed them."
Lieberman's Yisrael Beitenu campaigned during last year's election for a tougher version of the loyalty pledge, which would apply to Arabs born in Israel and include a promise to serve in the military or perform other national service.
Yisrael Beitenu is the second-largest member of the governing coalition after Netanyahu's Likud party.