The Knesset (Israel's parliament) on Tuesday approved a preliminary reading of a controversial bill that considers Israel as the state of the Jewish people.
Proposed by the right-wing Likud party, the "Jewish nation" bill was passed in the first reading by 64-50 votes.
The bill must be approved in the second and third readings before it becomes a law.
The draft considers Jerusalem as the capital of Israel and Hebrew as the official language.
It also states that the justice system would go in favor of Israel's Jewish character to its democratic one in cases where the two are at odds.
MK Avi Dichter, one of the sponsors of the bill, said the draft would, for the first time, enshrine Israel as "the national home of the Jewish people."
The bill has invited a storm of criticism from Arab MKs, who described the bill as "racist".
"The draft law states that there are two types of citizens, Jewish people with full rights and another group which is allowed to stay but without rights," Arab MK Ahmad Tibi said.
"If it is not racism, I do not know what racism is," he said.
MK Haneen Zoabi, for her part, said the bill "proves that the Knesset itself recognizes that there is no realistic possibility for a Jewish and democratic state at the same time."
"This country has to choose, and for the past 70 years it has chosen to be Jewish rather than democratic," Zoabi said in a statement.
"Israel cannot speak on behalf of the Jews of the world, nor in the name of the people of this country," she said. "Israel can only speak in the name of Zionism and its colonial orientation and racist values."
Aside from Palestinians in Israel-occupied territories, there are roughly 1.4 million Arab citizens of Israel.
