Israeli ministers have approved a controversial bill that will downgrade Arabic as an official language and define the country as the "national home of the Jewish people".

The Haaretz newspaper reported on Sunday that if the bill were to become law, Arabic would no longer be an official language and would instead be defined as having special status.

In the bill, Hebrew is defined as the "national language", which would become part of the country's so-called basic law, which is similar to a constitution, it said.

The legislation still has to go through further drafting by the justice ministry and pass several votes in parliament.

Critics have described the proposed legislation, which also declares that the "right to self-determination" in Israel is "unique to the Jewish people", as impinging on the rights of its Arab minority, who make up some 20 percent of the 8.7 million population.

Defining Israel as the "national home of the Jewish people" has also raised concerns among rights activists and others worried over discrimination and attempts to further mix religion and state.

Ayman Odeh, a parliament member who heads the mainly Arab Joint List alliance, said approving the bill would mean trampling on minority rights, adding it would "legally transform us into second-class citizens".

The bill was sponsored by Avi Dichter, a member of the Likud party of Benjamin Netanyahu, who said it was necessary to "set in law our national identity while remaining a democratic state".

Palestinian citizens of Israel allege widespread discrimination by Netanyahu's government.