Israel alleged that UNRWA employees were involved in a Hamas attack on October 7, 2023, a charge vehemently denied by the UN agency.
The forum of relatives of the kidnapped persons had called for rallies and a day of fasting to mark the 500 days under the slogan “Get them out of hell.”
Nearly 50,000 children in the West Bank also go to UNRWA schools.
Three more readings by parliament are required before the law comes into force.
Around 18,000 members of the security forces will be deployed on election day as some 6.8 million eligible voters cast their ballot.
Mr Bennett now becomes Israel’s 13th prime minister while Mr Lapid will be the 14th.
