The new legislation includes amendments on residency and citizenship that won the approval of the far right.
The bill had been significantly toughened since it was first introduced, with some on the left of Macron’s ruling Renaissance party accusing his government of caving in to Marine Le Pen’s far-right National Rally (RN) in an attempt to secure support.
Interior Minister Gerald Darmanin, an ambitious 41-year-old who has spearheaded the legislation, expressed relief that the votes of his coalition and conservatives were enough to get the bill through parliament.
Some 349 members voted in favour with 186 against. The upper house had passed the legislation already.
“Today, strict measures are necessary,” Darmanin said afterwards. “It’s not by holding your nose in central Paris that you can fix the problems of the French in the rest of the country.”
An earlier version of the bill was voted down without even being debated in the National Assembly, in a major blow to Macron.
Pressure from the right saw the government agree to water down regulations on residency permits while delaying migrants’ access to welfare benefits – including for children and housing – by several years.
The amendments also introduce migration quotas, make it harder for migrants’ children to become French, and say that dual nationals sentenced for serious crimes against the police could be stripped of their French nationality.
Le Pen had said the RN would endorse the amended legislation – prompting embarrassment among more left-wing members of Macron’s party who find it unpalatable to vote in unison with the far right.
In the end, 20 members of Renaissance voted against the bill, 17 abstained and 131 voted in favour.
After the vote, Le Pen claimed an “ideological victory”.
The French have long prided themselves on having one of the most generous welfare systems in the world, granting payments even to foreign residents, helping them pay rent or care for their children with means-tested monthly contributions of up to a few hundred euros.
The far right and, more recently, conservatives, have argued these should be reserved for French people only.
Macron had made the migration bill a key plank of his second mandate and might have had to shelve it without the compromise.
Dozens of NGOs condemned the legislation ahead of the vote.
It is “the most regressive bill of the past 40 years for the rights and living conditions of foreigners, including those who have long been in France”, about 50 groups, including the French Human Rights League, said in a joint statement.
“With this text directly inspired by RN pamphlets against immigration, we are facing a shift in the history of the republic and its fundamental values,” said French Communist Party leader Fabien Roussel.