The bill's passage in the parliament, or Knesset, is a critical step for the pullout plan, which envisions abandoning all 21 Jewish settlements in the Gaza Strip and four in the northern West Bank.
Last week, the Knesset passed a separate measure providing the general outlines of the withdrawal, which is scheduled to be carried out next year. Before then, there must still be another vote of approval from the Cabinet.
Today's vote on the compensation bill came without the political suspense of the pullout bill passed last week, though the margin of victory was slightly smaller.
Both measures have met fierce resistance from settlers and their supporters, who say the government is seeking to forcibly remove Jewish residents from land that is their biblical birthright.
Foes accuse Sharon, once the hero and chief patron of the settlement movement, of ramming the plan through in spite of settler opposition and dissent among hard-liners within his conservative Likud Party.
As lawmakers prepared to vote on the bill today, Israeli newspapers carried an advertisement that said, "Caution: Dictatorship!"
The advertisement, placed by the main settlers group, highlighted aspects of the compensation bill that spell out punishments against those who resist evacuation, including partial loss of payments and a possible jail term.
The Israeli government expects the pullout to cost between $550 million and $660 million, excluding the expense of police and soldiers needed during removal of the residents.
About 8,000 settlers live in the Gaza Strip communities, while several hundred inhabit the four West Bank settlements slated for removal.
In hopes of keeping protests against the withdrawal from spilling into violence, some lawmakers have called for even harsher penalties against those who resist evacuation.
"I think there are some settlers who do not understand that every possible political act of protest is fine, but that using force against state authorities and law enforcement agencies is not," said Knesset member Avshalom Vilan of the leftist Yahad Party.
Withdrawal opponents say protests will be peaceful. However, they have urged Sharon to put the matter to a nationwide referendum, saying such a vote would help avoid a damaging schism among Israelis.
Public opinion polls have consistently shown majority support for the withdrawal.
Following the Knesset vote last week, Finance Minister Benjamin Netanyahu and three other Likud ministers threatened to resign in two weeks unless Sharon agreed to a referendum. But Sharon has refused, and three of those ministers backed down.
Netanyahu, who is Sharon's main political rival, has not indicated whether he will follow through with his threat to quit at a time that the proposed 2005 budget is to make its way through the Knesset.