BERLIN—Germany's upper house of parliament on Friday approved legislation tightening asylum rules for immigrants from three Balkan countries following a recent spurt in applications.

The reform classifies Serbia, Macedonia and Bosnia-Herzegovina as safe countries of origin, in a move aimed at speeding up the processing of the large number of applications from those countries. Critics say the move makes it easier for Germany to turn away applicants from the Balkan states and will prove detrimental toward Roma, or gypsies, trying...