A bill banning associates of former leader Moamer Gathafi from politics risks inflaming tensions in Libya and could see top officials including the premier and the assembly chief removed from their posts.
The bill, first proposed in December, will target those who worked in 36 job categories during Gathafi's four decades in power.
Supporters of the new law say that it has popular backing "out of respect for the sacrifices made by the country's martyrs" who were killed fighting the former regime in the 2011 uprising.
In its current draft, the bill could remove many of the country's new leaders from their posts, including Mohammed Megaryef, president of the General National Congress (GNC) and Libya's highest political authority, his deputy Jumaa Attiga and Prime Minister Ali Zeidan.
Observers said that the bill moved one step closer to ratification on Wednesday, when the assembly made a change to the interim constitutional declaration making it impossible to appeal the law before it is passed.
In January, heated debates about the bill created a climate of tension in a country which is already unstable because of the weakness of the country's security organisations.
These tensions reached their peak in March, when Megaryef's car was raked by gunfire in Tripoli as he left a meeting hall besieged by demonstrators.
However, the GNC has said that it is determined to see the bill through to the statute books.
"The law will be passed with a majority of 100 votes plus one out of 200 members of the assembly, while previously approval would have required a majority of 120 votes," GNC spokesman Omar Hmeidan said.
Hmeidan added that the assembly had cleared another hurdle in the interim constitutional declaration which says that "Libyans are equal before the law and in the civil and political rights they enjoy."
It did so by introducing a new article "authorising the temporary exclusion of some Libyans from political life."
"The immunisation (protection against any potential legal challenges) of the political exclusion law is the first stage in successfully creating a law based on fair, impartial and objective criteria," former political prisoner Sami al-Saadi said.
"Political isolation is not punishment or proof of a crime, but a temporary precaution to ensure the construction of a new Libya free from corruption and disorder," he said.
Saadi said he was aware that the law "could affect honest patriots," but said that the bill needs to be passed to avoid exceptions that could put an end to the law on the grounds that it targets one political movement or party over another.
The law's critics say it was "tailor-made" to isolate Mahmud Jibril, head of the liberal National Forces Alliance, who won legislative elections in July 2012 ahead of Islamists.
Libya's mufti, Sheikh Sadeq al-Ghariani, called on citizens to come out in their thousands to support the passing of the bill.
The National Transitional Council, the former political wing of Libya's anti-Gathafi rebels, had already set up the Higher Commission of Integrity and Patriotism, responsible for vetting officials or candidates for public posts to see if they worked for the former regime.
To date, the commission has excluded 350 people, some of whom have brought and won appeals against their dismissal at administrative tribunals.