The bill, titled "Basic Law: Referendum" will now be referred to the Knesset (parliament) Wednesday for an approval, Xinhua reported.
A "basic law" means it can only be revoked with the support of 61 MPs.
Renewed peace talks between Israel and the Palestinians are to begin in Washington Tuesday.
The report said Netanyahu is trying to please his coalition members and ease public opinion, as Israel will be required to make concessions to the Palestinians amid the fresh talks.
The concessions include the release of more than 100 Palestinian prisoners as well as a possible halt in the construction of settlements in the West Bank.
"Any agreement, if one shall be reached in the negotiations, will be brought to a referendum," Netanyahu said.
"It's important that on these crucial decisions every citizen will vote directly in a matter that will decide on the future of the state," he said.
--IANS (Posted on 28-07-2013)