The Regulation Law was approved by the Knesset by a vote of 60 in favor to 49 opposed during the bill's preliminary reading.
The bill will now be sent to a Knesset Committee to prepare it for its first reading. It must pass three further readings to become law.
The Regulation Law was proposed by Likud MK Yoav Kish, along with Jewish Home MKs Shuli-Muaelem Refaeli and Bezalel Smotrich.
Justice Minister Ayelet Shaked thanked left-wing activists for enabling the bill to move forward. "I want to start by giving thanks - mainly thanks to Peace Now. You know, no one in the history of the Jewish people who wanted to curse us has been able to without actually blessing [us]. Without meaning to, Peace Now and other leftist organizations - I don't want to deny credit to anyone [who deserves it], have aided the settlement enterprise in Judea and Samaria."
"Some of these groups tried to harass settlers?" she asked. "They signed the Oslo Accords in an attempt to destroy the settlements in Judea and Samaria, and paved the way [for the construction] of bypass roads which allowed the settlements to grow. This allowed for the development of Mt. Hevron, Gush Etzion, Binyamin, the Jordan Valley, Samaria, and countless new residents."
Earlier, Jewish Home leader Naftali Bennett said that the Regulation Law was a major victory for the Israeli right.
"If the law does pass, then we can say that there has been a revolution today on a par with the one in '77." Bennett said.
"Today, the Israeli Knesset prevented the establishment of a Palestinian State in Judea and Samaria [and chose] the route of sovereignty." he added. "Make no mistake, the Regulation Law is the spearhead of sovereignty."