To applause from members of parliament, minister Farouk Hosni said: "We ban any book that insults any religion... we will confiscate this book."
Parliament was debating the book and film at the request of several Coptic Christian members who demanded a ban.
Georgette Sobhi, a Coptic member, held up a copy of the book and the Arabic translation and said it contained material which was seriously offensive.
"It's based on Zionist myths, and it contains insults towards Christ, and it insults the Christian religion and Islam," she said.
A central part of the fictional plot is that Christ married Mary Magdalene and that their descendants are alive today.
Hussein Ibrahim, the deputy head of the Muslim Brotherhood's parliamentary bloc, said that as the Brotherhood had opposed the Danish cartoons of the Prophet Mohammad, so they would oppose any insult to Jesus Christ.
News of the government's decision caused concern in other quarters, with one human rights activist calling it a very dangerous decision and a continuation of an assault on freedom of expression.
'Decision violates freedom of thought'
Hafez Abu Saeda, the secretary-general of the Egyptian Organization for Human Rights, told Reuters: "This violates freedom of thought and belief ... This is fiction. It's art and it should be regarded as art."
He said the book had sold well in various Christian-majority countries and had not faced calls for a ban. The members of parliament should be aware that the measure would not work, given that thousands of Egyptians already own copies and that the book can be downloaded from the Internet, he added.
Shahira Fathy, the manager of Cairo's popular Diwan bookstore, said the book had been one of their top sellers since it came out in 2003.
"It's a shame. A lot of people are interested in this topic," She said, adding that other books written on the subject had also been selling.
The Egyptian distributors of the film had postponed a decision on screening it in Egypt in anticipation of a ban.