A proposed bill would make it a crime in Israel to criticize people by comparing them to Nazis.
The draft legislation would impose penalties of up to six months in jail and a $25,000 fine for using the word "Nazi" or Holocaust symbols for purposes other than teaching, documentation or research.
The draft legislation passed its first hurdle Monday when Cabinet ministers approved it. It now goes to the full parliament for a vote.
The bill was proposed after ultra-Orthodox demonstrators set off a furor by dressing young boys as Nazi concentration camp inmates during a protest against what they said was incitement against their community. Protesters have also called police "Nazis."
The bill has been criticized by civil rights groups that see it as infringing on freedom of expression.
Meanwhile, Israel tightened its law on infiltrators Tuesday to stem an increasing flow of African migrants crossing its porous Sinai Desert border from Egypt.
The move drew sharp criticism from refugee groups and activists.
Illegal migrants including asylum seekers now face up to three years' imprisonment under the amended legislation which parliament approved in the early hours of Tuesday.
Aid groups denounced the decision as an "immoral" response to refugees fleeing civil conflict, while one commentator called it a stain on the democracy of Israel, many of whose citizens themselves arrived as refugees after the Holocaust.
Israel may now jail anyone illegally crossing the border for up to three years, up from the current 60 days, a parliamentary statement said. The amendment also entitles the authorities to seek jail terms for anyone who aids illegal infiltration.
A record number of migrants, largely from Sudan and Eritrea, have arrived in Israel in the past two years. Numbers have risen in the past few months, with government figures showing more than 2,000 arrivals in November. December's figure is expected to approach 3,000.