An Israeli ministerial committee on Sunday passed legislation that would require local nonprofits to disclose if they are funded primarily by foreign countries, drawing criticism from left-wing peace activists.

The bill, promoted by the right-wing Jewish Home party and Justice Minister Ayelet Shaked, received the expected approval of the Israeli parliament’s Ministerial Committee for Legislation. That clears it for debate and voting in the parliament, known as the Knesset.

If...