President Robert Mugabe's Zanu PF party, which enjoys a majority in parliament, pushed through the bill after members of the main opposition Movement for Democratic Change (MDC) walked out in protest.

Mugabe's government -- which critics accuse of plunging Zimbabwe into turmoil by seizing white-owned farms and handing them to inexperienced black farmers -- says the bill is part of its drive to empower the country's poor majority.

Analysts fear the move could sound the death knell for an economy that has also suffered from foreign investor flight.

MDC legislators argued the law was designed to enrich a few powerful individuals and win votes for Mugabe's party in parliamentary and presidential elections due next March.

Indigenisation and Economic Empowerment Minister Paul Mangwana and ruling Zanu PF legislators defended the bill and branded those opposed to it as seeking to perpetuate economic imbalances brought about by colonialism.

Mugabe, 83 and in power since independence from Britain in 1980, has accused some foreign-owned firms of working with his Western opponents to topple his government by raising prices without justification and stashing foreign currency proceeds abroad.

"If we do not dismantle the structure of colonialism that we inherited then we have not given back all the country's resources to its rightful owners, who are our people," Mangwana said.

Mangwana sought to allay business fears of a blanket seizure by saying the government would work with different industries to set timetables for transfer of shares to locals.