The Israeli Council for Higher Education has approved a plan to build a college in what is regarded as the Arab capital city of Nazareth with a Muslim population of more than 70%.
The college will be part of the University of Haifa, Israel's daily Haaretz reported, which last year was accused by one Palestinian lawyer of restricting freedom of expression among its students.
The official language of the college will be Hebrew, but courses taught in Arabic and English are also planned to be included, the newspaper reported.
The council justified its decision by saying in a statement that "there is a real need in Arab society in the north for academic studies".
Prof. Manuel Trajtenberg, chairman of the Planning and Budgeting Committee of the Council for Higher Education, told Haaretz: "When we came into office we said we wanted to make higher education accessible to the Arab sector as a national mission."
He added that the college is "not an Arab academic institution, because there is no such thing as a Jewish or Arab academic institution, but location is an important matter because it allows accessibility to the adjacent population".
Nazareth is the largest city in Israel's North Sector, one of the country's six administrative districts, and it is known as the "Arab Capital of Israel", given the high number of Arabs who inhabit the area.
It is estimated that more than two-thirds of the total population of Nazareth (56,987 out of 81,410) are Muslims.
The plan to build the college was approved after taking into consideration that between 8,000 and 10,000 Arab youths travel abroad for their studies every year, Trajtenberg added.
The college is expected to offer courses on sciences, nursing, economics and accounting and other employable professions.
The council's chairman, Education Minister Shay Piron, said the establishment of the first publicly funded college in Nazareth is "good news for the Arab sector and its young people, because it makes higher education accessible to them and increases their chances of employment".
The chairman of the college's board, Mazen Kofti, said the intention was "to open the college not only to Arab students but to attract students from all over the region and even from abroad".
In 2005, Britain's Association of University Teachers (AUT) voted to boycott the University of Haifa and Bar-Ilan University, in Tel Aviv, claiming they restricted academic freedom and teaching to Palestinians.
Last year, the University of Haifa banned students from waving Palestinian flags during protests against the Brewing-Prawer plan, which ruled the relocation of between 40,000 and 70,000 Bedouins from areas not recognised by the Israeli government.