Draft legislation in Israel would make it a crime in the country to use the word "Nazi" or symbols of the Holocaust for purposes other than teaching.
There will be a preliminary hearing in parliament on Wednesday for the bill, which would impose penalties of up to six months in jail and a $25,000 fine.
The move comes a week after ultra-Orthodox Jews dressed in concentration camp uniforms to protest against alleged incitement against them.
The incident sparked outrage in Israel.
The national Yad Vashem Holocaust memorial denounced the use of Nazi imagery as "disgraceful", and several survivors' groups condemned it.
Six million Jews were killed by the Nazis during World War II. About 200,000 ageing survivors of the Holocaust live in Israel.
On 31 December, thousands of ultra-Orthodox Jews gathered in Jerusalem's Mea She'arim district to protest against what they said was a nationwide campaign by the secular media against their community.
They wore yellow Stars of David on their clothes bearing the word "Jude" (German for "Jew"), and dressed their children in striped black-and-white uniforms associated with concentration camps. Israeli police were also called "Nazis".
Ultra-Orthodox Jews, who make up 10% of Israel's population, have been criticised in recent weeks for attempting to impose their strict beliefs on others as their population grows and spreads to new areas.
Extremist sects have sought to ban the mixing of sexes on buses, pavements and other public spaces. Members of one sect jeered and spat at girls walking to school, saying they were dressed immodestly.
Such efforts have been condemned by the Israeli government and triggered widespread demonstrations against the ultra-Orthodox community. At one recent protest, people held signs reading: "Stop Israel becoming Iran."
On Monday, the Ministerial Committee for Legislation voted to support the bill which would, according to Israeli media, prohibit the use of all forms of the word "Nazi" or similar-sounding words; epithets associated with Nazism, the Third Reich or any of its leaders; the wearing of striped clothing resembling that worn by prisoners in concentration camps; and yellow stars like the ones Jews were forced to wear during the Holocaust.
It would also ban all photographs, drawings, sculptures depicting a swastika or anything else that makes a definitive reference to Nazism.
"Unfortunately we have been witness in recent years to the cynical exploitation of Nazi symbols and phraseology, which is offensive to Holocaust survivors, their families, and many others among the Jewish people," said the bill's sponsor, Uri Ariel of the National Union party.
"The law constitutes an appropriate warning, and will anchor in law a fitting punishment for the despicable use," he added.
However, the draft legislation has been criticised by civil rights groups.
"Precisely because of the importance and centrality of the Holocaust, the attempt to dictate when and in what context it can be referenced is very problematic," the Association for Civil Rights in Israel (Acri) said in a statement.
"This bill seeks in effect to control the public debate, its content and tone, with force, using criminal prohibitions and the threat of prison."
"Freedom of expression is the right to say harsh, critical and even hurtful things. It is the right to give crude and extreme expression to opinions, emotions and thoughts and it also includes the right to make rhetorical use of difficult and provocative images," the Acri statement added.