Turkish president responds to the bill's approval Reuters

Turkey has warned Nicolas Sarkozy that he will compound "France's political, legal and moral mistakes" and face retaliatory action if he signs a law making it a crime to deny that the mass killing of Armenians by Ottoman Turks nearly a century ago constitutes genocide.

French senators approved the bill on Monday night, risking more sanctions from Ankara and complicating an already delicate relationship with the rising power.

Those denying or "minimising" the genocide could face a €45,000 (£37,000) fine and a year in jail. France recognised the killing of the Armenians as "genocide" in 2001, but at the time introduced no legal penalty for denying it.

Turkey – which sees the allegations of genocide as a threat to its national honour – has already suspended military, economic and political ties and briefly recalled its ambassador last month when the lower house of parliament approved the same bill. The French president, whose party supported the legislation, is expected to ratify the bill before the presidential elections in April. Sarkozy's critics have accused him of pandering to the 500,000 Armenians who live in France in a bid to secure their votes.

The bill's approval met with a furious reaction in Ankara, with the foreign ministry describing the action as irresponsible and saying it was "unfortunate that the historical and multi-dimensional relations between the Republic of Turkey and France have been sacrificed to considerations of political agenda".

The Turkish government did not indicate what countermeasures it was considering, saying only: "We find it useful to remind all parties that, in case of the completion of the finalisation process for the law, we will not hesitate to implement, as we deem appropriate, the measures that we have considered in advance.

"Similarly, it must be also known that we will continue to strongly use our right to defend ourselves on a legitimate basis against unfair allegations."

Supporters of the bill claim 1.5m Armenians were killed in Turkey under the Ottoman authorities during the first world war in a deliberate policy that constitutes genocide. Many historians agree, but Turkey disputes the term genocide and claims many Turks died during fighting in eastern Turkey in 1915 and 1916.

The vote came after an entire afternoon and evening of debate in the Sénat. Defending the bill, government minister Patrick Ollier told senators that legislation was justified in the "fight against the negationist poison".

He added: "This proposed legislation is part of a general movement to repress racist and xenophobic statements."

However, last week a Sénat committee warned the law would be unconstitutional because it violates the right to freedom of speech.

Although the French foreign ministry described Ankara a "very important ally", relations with Turkey are already strained – largely because Sarkozy opposes Turkey's entry into the EU.

The bill's approval also comes at a time when Turkey, a Nato member, is playing an increasingly important role in the international community's response to the violence in Syria, in the standoff over Iran's nuclear programme and in Middle East peace negotiations.