Bill passed allowing Palestinian youths convicted of throwing stones at Israeli occupation forces a maximum 20 years in prison, even without proof of harmful intent in their actions.
Also under the new law, obstructing police activity by throwing stones at officers or police vehicles is punishable by up to five years in prison, according to the Times of Israel.
"Today, justice was done," Ayelet Shaked of the right-wing Jewish Home party said. "For years, terrorists avoided punishment and responsibility. Tolerance towards terrorists ends today."
"A stone thrower is a terrorist, and only an appropriate punishment can be deterrent, punitive and just," she added.
The bill won the approval of 69 MKs and was opposed by 17, following a heated Knesset debate.
Joint (Arab) List MK Jamal Zahalka called the legislation hypocritical and unjust.
"Imagine bringing before a truly just judge the stone thrower as well as those responsible for him throwing the stones. Who would the judge put in jail? The one destroying (the stone thrower's) home, expropriating lands, killing his brother, or the boy who threw a stone?" he asked during the discussion.
"You are picking on the person who responded to the major injustices, such hypocrisy. Those who demolish homes receive medals, but the boy who's anger is justified is imposed with punishments. There is no justice in this law," Zahalka added.
The move came after months of rioting in east Jerusalem where Palestinian residents have thrown rocks and fire bombs at police, cars, buses and trains. Over the past 10 days, 110 Palestinians have been arrested by Israeli police in Jerusalem's Old City.
Fellow party member Ahmad Tibi added that Jewish protesters are regularly protected by the army, even if they attack soldiers.
"Israel is taking vigorous action against terrorists and those who throw stones, fire bombs and fireworks," said the Israeli prime minister, Binyamin Netanyahu in a Guardian report.
"We will also pass stronger legislation on the issue. All of this is in order to restore quiet and security throughout Jerusalem. I have ordered massive reinforcements be brought into Jerusalem and that additional means to used in order to ensure law and order in Israel's capital."
Barak Medina, professor of law at Hebrew University, said tough jail sentences on stone throwers was not going to be effective. "Many young people who throw stones are unaware of the law and are not often rational about their actions. I don't think the justice system should be giving up on the rights of the accused just because of panic and concern."
The new policy also applies to children and dozens of Palestinian children have been jailed for over a month before their trial begins.