The Occupied Territories Bill was first introduced by a senator in January, but was delayed at the request of Ireland's minority government, headed by the Fine Gael party, which does not support it despite denouncing Israel's settlements policy.
However, now that "three opposition parties - Labour, Sinn Fein and Fianna Fail - have announced that they will support the bill", as well as "several independents", the "bill is now expected to pass".
If the bill is finally accepted, Ireland will become the first country member of the European Union, which will prohibit commercial activity on the territory of Israel.
The Occupied Territories Bill, tabled by musician and Senator Frances Black, successfully passed through the Seanad last night by 25 votes to 20 and will now move to the committee stage.
The Irish government strongly opposes the measure, saying there should be a common European Union response.
Israel's foreign ministry replied immediately with condemnation, calling it a "radical, anti-Israeli populist boycott that "undermines prospects for a dialogue between Israel and the Palestinians", as well as harms Palestinians working for those boycotted companies".
Israel's West Bank settlements are considered illegal under worldwide law and are bitterly opposed by Palestinians.
Knesset members had mixed reactions to the passage of the bill. There is a clear hypocrisy here: "How can we condemn the settlements as 'unambiguously illegal, ' as theft of land and resources, but happily buy the proceeds of this crime?" If the Irish bill is enacted and the firms abide by it, they will be breaking U.S. law, which now bans United States firms from taking part in foreign boycotts not supported by its government.
Currently, the country is importing a variety of products from illegal Israeli settlements, including fruit and vegetables, wine, plastics, big brand beauty products such as "Ahava", and others.
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"Legislation, which promotes a boycott of any kind, should be rejected as it does nothing to achieve peace but rather empowers the Hamas terrorists as well as those Palestinians who refuse to come to the negotiating table", the Israeli Embassy in Ireland said.
But Foreign Minister Simon Coveney warned it risked "fanning flames" in the Middle East.
The bill only targets products made beyond the Green Line.
But how did the Irish, who like the Jewish people have also faced centuries of persecution, end up so sympathetic to the Palestinian cause?
"The Irish Government has always condemned construction of illegal settlement".
Saeb Erekat, senior leader of the Palestinian Liberation Organisation, called the move by Ireland's upper house, Senead, "historic" and urge other countries to do the same.
Israel's Foreign Ministry has held the government accountable for the vote and has summoned Kelly to its offices for a Thursday meeting.
She said she visited Palestine earlier this year and, highlighting an Israel settlement which led to a Palestinian village losing its water supply to provide water for a chicken farm.