* Netanyahu says law is the will of an "absolute majority"
* Plants seeds of "apartheid state", critic says
* Clause on Jewish-only communities dropped
JERUSALEM - Israel passed a law on Thursday to declare that only Jews have the right of self-determination in the country, something members of the Arab minority called racist and verging on apartheid.
The "nation-state" law, backed by the right-wing government, passed by a vote of 62-55 and two abstentions in the 120-member parliament after months of political argument. Some Arab lawmakers shouted and ripped up papers after the vote.
"This is a defining moment in the annals of Zionism and the history of the state of Israel," Prime Minister Benjamin Netanyahu told the Knesset after the vote.
Largely symbolic, the law was enacted just after the 70th anniversary of the birth of the state of Israel. It stipulates that "Israel is the historic homeland of the Jewish people and they have an exclusive right to national self-determination in it".
The bill also strips Arabic of its designation as an official language alongside Hebrew, downgrading it to a "special status" that enables its continued use within Israeli institutions.
Israel's Arabs number some 1.8 million, about 20 percent of the 9 million population.
Early drafts of the legislation went further in what critics at home and abroad saw as discrimination towards Israel's Arabs, who have long said they are treated as second-class citizens.
Clauses that were dropped in last-minute political wrangling - and after objections by Israel's president and attorney-general - would have enshrined in law the establishment of Jewish-only communities, and instructed courts to rule according to Jewish ritual law when there were no relevant legal precedents.
Instead, a more vaguely-worded version was approved, which says: "The state views the development of Jewish settlement as a national value and will act to encourage and promote its establishment."
Even after the changes, critics said the new law will deepen a sense of alienation within the Arab minority.
"I announce with shock and sorrow the death of democracy," Ahmed Tibi, an Arab lawmaker, told reporters.
Netanyahu has defended the law. "We will keep ensuring civil rights in Israel's democracy but the majority also has rights and the majority decides," he said last week.
"An absolute majority wants to ensure our state's Jewish character for generations to come."
Israel's Arab population is comprised mainly of descendants of the Palestinians who remained on their land during the conflict between Arabs and Jews that culminated in the war of 1948 surrounding the creation of the modern state of Israel. Hundreds of thousands were forced to leave their homes or fled.
Those who remained have full equal rights under the law but say they face constant discrimination, citing inferior services and unfair allocations for education, health and housing.
In Ma'alot-Tarshiha, a municipality in northern Israel which was created by linking the Jewish town of Ma'alot and the Arab town of Tarshiha, there was anger among Arab residents.
“I think this is racist legislation by a radical right-wing government that is creating radical laws, and is planting the seeds to create an apartheid state," said physician Bassam Bisharah, 71.
"The purpose of this law is discrimination. They want to get rid of the Arabs totally," said Yousef Faraj, 53, from the nearby Druze village of Yanuh. "The Israelis want to destroy all the religions of the Arabs."
Adalah, the Legal Center for Arab Minority Rights in Israel, called the law a bid to advance "ethnic superiority by promoting racist policies".