The contentious bill comes on the heels of a law passed last week to punish local people who call for boycotts of Jewish settlements in the West Bank.
Critics say the bills violate the right to free speech, and the recent legislation has sparked a fierce debate over the limits of Israeli democracy.
At the weekly meeting of his cabinet, Prime Minister Benjamin Netanyahu said last week’s boycott bill, which allows settlers to sue boycott supporters for financial damages, was necessary to battle “attempts to delegitimise” Israel. But he said he would oppose the new legislation to investigate rights groups.
“We must act systematically and prudently regarding the steps we are taking,” Netanyahu said.
“We must protect our system of law and the rule of law, the courts and our enforcement agencies. Therefore, we will act cautiously.”
The nationalist Yisrael Beitenu, or Israel is Our Home party, is behind the new bill to investigate the funding of leftist NGOs.
The party’s leader, foreign minister Avigdor Lieberman, criticised Netanyahu for his opposition yesterday and said the groups in question aided terrorism.
“These are not leftist groups and they are not human right groups. These are terror groups and organisations that help terror and people who aide terror,” Lieberman said.
Yesh Din, one of the three groups singled out by Lieberman, accused him of incitement.
“The foreign minister’s methods are reminiscent of the methods applied by dark regimes, in order to cope with those who were deemed as government critics,” said Yesh Din attorney Michael Sfard.