The measure, approved 361-37, would cut off aid to non-governmental groups working in the West Bank and Gaza except for health programs
The administration believes the legislation goes too far. But Rep. Ileana Ros-Lehtinen, a chief sponsor of the bill, said: "The United States must make it unambiguously clear that we will not support such a terrorist regime, that we will not directly or indirectly allow American taxpayer funds to be used to perpetuate the leadership of an Islamic Jihadist group."
The vote on the Palestinian Anti-Terrorist Act came as Prime Minister Ehud Olmert was meeting US President George W. Bush at the White House to discuss Israel's plans to impose a West Bank settlement on the Palestinians. Olmert addresses a joint session of Congress on Wednesday.
The White House, which has already cut off funds for the Hamas-led government until it recognizes Israel's right to exist and renounces acts of terrorism, criticized the bill as unneeded and overreaching in its restrictions.
"The bill is unnecessary as the executive branch already has ample authority to impose all its restrictions and it constrains the executive's flexibility to use sanctions," the State Department said in a statement.
The measure must still be considered in the Senate, where Senators Mitch McConnell and Joe Biden have a similar but somewhat less restrictive bill that carves out more exceptions for Palestinian Authority officials not affiliated to Hamas.
'Palestinians have made their choice in voting Hamas'
In three hours of sometimes emotional debate on the House floor Monday night, lawmakers were unanimous in condemning Hamas, which ascended to power in January elections, but differed sharply on the wisdom of the comprehensive sanctions outlined in the bill.
"The issue is not Hamas," said Rep. David Price, a critic of the bill. "The issue is rather the bill's ban on aid to all non-governmental groups, private groups and organizations, many of whom are diametrically opposed to Hamas's philosophy."
But Rep. Tom DeLay said Palestinians "have made their choice" in voting Hamas into power. "American aid to the Palestinian people must be predicated on their rejection of terrorism."
Pro-Israel groups have also split on the issue, with the largest lobbying group, the American Israel Public Affairs Committee (AIPAC), pushing for its passage.
"Today, Congress made it clear that Hamas' decision to continue its support for terrorism has direct and immediate consequences," AIPAC said after the vote.
Other groups, including the Israel Policy Forum and the US Conference of Catholic Bishops, have come out against it.
"We believe that this legislation will damage America's interests and Israel's as well by undermining the US Ability to advance peace and democracy in the region," the Israel Policy Forum said in a statement.