A previous attempt to adopt similar legislation in 2003 was met with a protest that drew around half a million people onto the streets and was eventually shelved.
Pro-democracy activists and politicians have for years opposed the idea of national security laws, arguing they could erode the city's high degree of autonomy, guaranteed under the "one country, two systems" handover agreement, which China says it is undermined by protesters.
"It is essentially declaring directly that 'one country two systems' is null and a failure," said Eric Cheung, principal lecturer at Hong Kong University's department of law.Local pro-democracy lawmakers denounced the plans on Thursday night as "the end of Hong Kong".
"Beijing is attempting to silence Hong Kongers’ critical voices with force and fear," pro-democracy activist Joshua Wong tweeted. "Deep down protesters know, we insist not because we are strong, but because we have no other choice."
Hong Kong's Legislative Council chairman Andrew Leung said it "was definitely not the end of one country, two systems."
"If it continues like this in Hong Kong, what about the livelihood of our people, the economy and our business," he said, referring to protests
The U.S. State Department warned a high-degree of autonomy and respect for human rights were key to preserving the territory's special status in U.S. law, which has helped it maintain its position as a world financial centre.
Taiwan's Mainland Affairs Council urged Beijing on Friday not to lead Hong Kong into "bigger turmoil" due to wrong policy decisions.