Israel's education ministry has ordered the removal of the word nakba – Arabic for the "catastrophe" of the 1948 war – from a school textbook for young Arab children, it has been announced.

The decision – which will alter books aimed at eight- and nine-year-old Arab pupils – will be seen as a blunt assertion by Binyamin Netanyahu's Likud-led government of Israel's historical narrative over the Palestinian one.

The term nakba has a similar resonance for Palestinians as the Hebrew word shoah – normally used to describe the Nazi Holocaust – does for Israelis and Jews. Its inclusion in a book for the children of Arabs, who make up about a fifth of the Israeli population, drives at the heart of a polarised debate over what Israelis call their "war of independence": the 1948 conflict which secured the Jewish state after the British left Palestine, and led to the flight of 700,000 Palestinians, most of whom became refugees.

Netanyahu spoke for many Jewish Israelis two years ago when he argued that using the word nakba in Arab schools was tantamount to spreading propaganda against Israel.

Palestinians have always maintained that the 1948 refugees were the victims of Israeli "ethnic cleansing". But in recent years a new generation of revisionist Israeli historians has rejected the old official narrative that the Palestinians, supported by the neighbouring Arab states, were responsible for their own misfortune.

Reflecting those changing perceptions, Ehud Olmert, Israel's last prime minister and leader of the centrist Kadima party, referred to Palestinian "suffering" at the Annapolis peace conference in 2007.

Netanyahu's Likud takes a different view. "There is no reason to present the creation of the Israeli state as a catastrophe in an official teaching programme," said the education minister, Gideon Saar. "The objective of the education system is not to deny the legitimacy of our state, nor promote extremism among Arab-Israelis." There was bitter controversy in 2007 when nakba was introduced into a book for use in Arab schools only, by the then education minister, Yuli Tamir of the centre-left Labour party.

"In no country in the world does an educational curriculum refer to the creation of the country as a 'catastrophe'," Saar told MPs in the Knesset yesterday. "There is a difference between referring to specific tragedies that take place in a war – either against the Jewish or Arab population – as catastrophes, and referring to the creation of the state as a catastrophe."

Arab MP Hana Sweid accused the government of "nakba denial". The follow-up committee for Arab education said: "Palestinian-Arab society in Israel has every right to preserve its collective memory, including in its school curriculums."

Jafar Farrah, director of Mossawa (Equality), an Israeli-Arab advocacy group, told Reuters the decision to excise the term nakba only "complicated the conflict". He called it an attempt to distort the truth and seek confrontation with the country's Arab population.

Yossi Sarid, a dovish former education minister, said the decision showed insecurity. "Zionism has already won in many ways, and can afford to be more confident," he said. "We need not be afraid of a word."

Israeli Arab activists have also pledged to carry on marking Nakba Day in the face of planned legislation that would withhold government money from institutions that fund activity deemed detrimental to the state.

These include commemorating the nakba – on the same day as Independence Day – "rejecting Israel's existence as the state of the Jewish people" and supporting an "armed struggle or terrorist acts" against Israel. An initial version proposed by the far-right foreign minister Avigdor Lieberman would have banned all Nakba commemorations and carried sentences of up to three years in prison.

By the book

Japan has long been criticised for toning down aspects of its wartime atrocities in textbooks, particularly the Nanjing massacre and use of sex slaves. Russia has taken up Soviet techniques of airbrushing history, a book being banned two years ago for positing that Vladimir Putin had established an "authoritarian dictatorship". A decade after Nelson Mandela's release from prison, black schoolchildren in South Africa were still studying textbooks that extolled the voortrekkers and offered only minimal explanations of their own history. In Britain it was an exam paper that caused offence when a poem by Carol Ann Duffy containing referencing knife crime was removed from the GCSE syllabus. The Carol Ann Duffy poem began: "Today I am going to kill something. Anything./ I have had enough of being ignored and today/ I am going to play God."