Israel’s parliament has passed a divisive law declaring that only Jews have the right to “national self-determination” in Israel, prompting angry accusations from Arab citizens that the government is formally codifying racism.

The law, known as the nation state bill, passed by a narrow 62-55 margin early on Thursday morning after hours of fractious debate between MPs in the chamber of the Knesset.

While Israel is known around the world as the only Jewish state, its own laws have never formally classified it as a state for Jews. The nation state bill describes Israel for the first time as “the national home of the Jewish people”.

“The right to exercise national self-determination in the State of Israel is unique to the Jewish people,” the law states.

The law downgrades Arabic so it is no longer an official language of Israel and declares that Jerusalem “complete and united” is the country’s capital.

Benjamin Netanyahu, the Israeli prime minister, and his Right-wing coalition government supported the bill. Mr Netanyahu praised the law’s passage as a “pivotal moment in the annals of Zionism and the State of Israel.”

“This is our state - the Jewish state. In recent years there have been some who have attempted to put this in doubt, to undercut the core of our being,” he said.