Israel’s opposition leader has become the latest high-profile politician to say the country is becoming increasingly “fascist,” after the introduction of a law targeting organisations supporting Palestinian rights.

Isaac Herzog, leader of Zionist Union, which incorporates the Israeli Labor Party, reacted after right-wingers passed the law in its third reading, with implications for non-governmental organisations which get most of their funding from overseas.

The onerous new requirements will mean the NGOs, many of which are critical of Israeli government policy, must detail and publish the source of their funding, while right-wing groups, which tend to support settlement building and other measures taken by the government, are exempt by virtue of their funding being predominantly private.

The European Commission said: “Israel enjoys a vibrant democracy, freedom of speech and a diverse civil society… This new legislation risks undermining these values.”

The law has been pushed by Israel’s ultra-nationalist Justice Minister Ayelet Shaked, who said it was a blow to “foreign intervention” in Israel and would ensure “transparency”. But critics say it is part of her wider agenda, and point to Shaked’s comments in May, in which she said she would seek to impose Israeli law on the West Bank – a move denounced by parliamentary colleagues as “the first step towards annexation”.

In his most stinging criticism to-date, Herzog said the NGO law was “indicative, more than anything, of the budding fascism creeping into Israeli society”. It echoes former prime minister Ehud Barak’s criticism last month, when he said “only a blind person or a sheep, an ignoramus or someone jaded, can’t see the erosion of democracy and the budding fascism”.

Ayelet Shaked

Ayelet Shaked

The opposition leader’s remarks highlight a growing consensus of concern regarding Netanyahu’s policies. Earlier this year, IDF Deputy Chief of Staff Maj. Gen. Yair Golan likened them to those of the Nazis, saying processes taking place in Israel today were reminiscent of those in Europe prior to the Holocaust. Former defence minister Moshe Ya’alon echoed the concerns when he resigned in the spring.

In the UK, groups such as the New Israel Fund said the NGO law was “discriminatory”. NIF chief executive Adam Ognall said: “This isn’t about transparency. It’s about intimidation – if you oppose the occupation, you’d better not speak up because there will be a price to pay. That chilling message is being heard by many Israelis, not only those affiliated with the handful of organisations regulated by this law.”

Israel’s most senior Arab leader Ayman Odeh said the new NGO law was designed to “intimidate and wipe away the few organisations that act and fight in the public sphere for equality to the Arab public”.

NGOs such as Peace Now said it was a “blatant violation of freedom of expression… its only aim is to silence and mark those who dare to voice criticism of the government or against settlements”.

Human Rights Watch said: “If the government is truly concerned about transparency, it would require all NGOs to alert the public to their sources of funding, not just those that criticise the government’s policies.”

There are dozens of NGOs in Israel which deal with the Israeli-Palestinian conflict and receive funds from the European Union or European states.