Pro-settlement groups, including parts of Israel's right-wing government, had sought to save it from demolition.
The law met with fierce opposition within the Parliament, with warnings that it would harm Israel, and the United Nations saying it would diminish chances for peace.
MK Aida Touma-Suliman (Joint List), told Mondoweiss that she believes the bill, which she called "part of the crawling annexation" of Palestinian land will be passed.
Attorney General Avichai Mandelblit has warned the government that the law could be unconstitutional and risks exposing Israel to global prosecution for war crimes.
Israeli Prime Minister Benjamin Netanyahu has taken full advantage of what he views as a more propitious climate in Washington, DC under the Trump administration to embark on a massive expansion of Israel's illegal settlement drive in the Palestinian West Bank.
Palestinians want to form a state from the West Bank, east Jerusalem and the Gaza Strip, territories captured by Israel in the 1967 Mideast war.
Under the legislation, Palestinians will be compensated for their land loss through "an annual usage payment of 125 percent of the land's value as determined by an assessment committee for renewable periods of 20 years", Haaretz wrote.
After his meeting with May on Monday afternoon, Netanyahu told reporters that the vote slated for Monday on the bill will go ahead as planned.
Inside Obama's quiet deal to help Australia with refugees
Bishop said "my understanding is that interviewing and vetting is still taking place", without providing any further details. The people detained on the islands aren't immigrants; they are refugees, with legitimate reasons to apply for asylum.
The law, which prevents the government from demolishing the homes, comes less than a week after police forcibly evacuated the Amona outpost.
The bill, which would legalize outposts unwittingly built on Palestinian land in the West Bank, has drawn sharp condemnation.
Netanyahu stressed that he did not ask the Americans for permission to pass the legislation, but merely informed them of his intention to pass the bill through a second and third reading. "I am not bothered by this", Netanyahu said.
The new US President Donald Trump has taken a softer stance on Israel's settlements than his predecessor, Barack Obama, despite widespread worldwide opposition. The issue is expected to be high on the agenda when the two leaders meet in the White House on February 15.
Israel disputes this and cites biblical, historical and political connections to the land, as well as security needs.
If Israel's parliament legislates for the Palestinians - rather than control them by military rule - Palestinians then would have the right to become citizens and vote in Israel, Meridor argued.
"I$3 t is imperative that the Knesset recognizes that passing this law will be harmful to Israel's image internationally and could undermine future efforts to achieving a two-state solution", said Jonathan Greenblatt, the ADL's national director.