Any peace deal involving withdrawal by Israel from annexed territory in East Jerusalem or the Golan Heights will need to be ratified by a national referendum under legislation approved by the Israeli parliament late last night.

Land ceded to the Palestinians in exchange for the inclusion of some West Bank settlements within Israel when borders are drawn would also be subject to a referendum. But the West Bank, which Israel has occupied for the past 43 years but never annexed, is not covered by the legislation which passed by 65 votes to 33.

The bill, promoted by the rightwing Likud party and backed by Israeli prime minister Binyamin Netanyahu, takes immediate effect. It comes as peace talks between Israel and the Palestinians are stalled despite a US push, including significant inducements offered to the Israelis, to get the two sides back round the table.

Saeb Erekat, the chief Palestinian negotiator, criticised the new national referendum law. "The Israeli leadership, yet again, is making a mockery of international law, which is not subject to the whims of Israeli public opinion," he said. "Under international law there is a clear and absolute obligation on Israel to withdraw not only from East Jerusalem and the Golan Heights, but from all of the territories that it has occupied since 1967. Ending the occupation of our land is not and cannot be dependent on any sort of referendum."

Under the law, a referendum will be required if withdrawal from annexed territory is not approved by a two-thirds majority in the Knesset (parliament).

It was opposed by Tzipi Livni, leader of the centre-right Kadima party which is outside the coalition government. The issue, she said, was "not about who wants and who does not want to cede parts of the land. It is about decisions that should be taken by the leadership that understands the scale of the problems and is privy to all their aspects. The people are not a substitute for such leadership."

Before the vote, Ehud Barak, the defence minister and leader of Israel's Labour party, issued a statement saying the bill was "a concrete block on the head of efforts to advance the diplomatic process … The government pledged to advance the peace process."

Israel has no history of holding referendums, and the new law does not specify how such a move would be funded.

The move was very significant, said Israeli political analyst Yossi Alpher. "In effect, it weakens the authority of the Knesset to decide these issues and turns it over to a system that has never been tried in Israel. It's extremely difficult to predict how the [new] system will behave. It is clearly intended to make it more difficult to approve withdrawal from these territories. It really strikes at the heart of the Israeli parliamentary system."