Israel's parliament was poised on Monday to vote on a law that would effectively ban Israelis from calling for boycotts of any part of the Jewish state or its settlements on occupied Palestinian land.

Activists and intellectuals have criticised the controversial bill, accusing the MPs behind it of stifling free speech and compromising Israel's democracy.

It comes in the wake of several calls within Israeli society for the boycott of institutions or individuals linked to West Bank settlements.

Earlier this year, a group of Israeli academics signed a petition calling for the boycott of a college in the West Bank settlement of Ariel.

And last year, 53 leading Israeli artists signed a statement pledging not to perform at a cultural centre at the same settlement.

Under the proposed law, those calling for similar boycotts could be sued by any individual or institution claiming economic, cultural or academic damage as a result of the boycott.

The bill does not require the petitioner to prove the damage was caused, but only that the damage could reasonably have been expected as a result of the boycott call.

It covers all calls for boycotts of people or institutions with ties to "the state of Israel, one of its institutions, or an area under its control, in such a way that may cause economic, cultural or academic damage."

Sponsored by a lawmaker from the Likud party of Prime Minister Benjamin Netanyahu, the bill must pass two more readings before becoming law, both scheduled for Monday.

It is believed to have sufficient support among lawmakers to pass but reportedly faces opposition from speaker Reuven Rivlin and the parliament's legal advisor Eyal Yinon, who fear the supreme court would strike it down as a violation of free speech.

Several Israeli newspapers reported that the second and third readings could yet be postponed as advisors to Netanyahu warned against timing the vote with a meeting of the international peacemaking Quartet in Washington on Monday.

The law has also stirred fierce opposition from rights group, including the Association for Civil Rights in Israel, which calls it "a direct violation of freedom of expression."

The group's executive director Hagai El-Ad said the bill "represents the current unfortunate crest in a wave of anti-democratic legislation that is gradually drowning Israel's democratic foundations."