Italy has passed a law to fine any boat rescuing refugees from sea up to €50,000 (£44,000), despite hundreds having died en route this year.
Those who repeatedly violate the law risk having their boats seized.
The regulation also allows undercover police investigations of possible trafficking operations and approves electronic eavesdropping on suspected people smugglers.
“I think we have approved a step forward for the security of this country,” said Matteo Salvini, Italy’s interior minister and deputy prime minister who has further tightened his country’s limitations on refugee rescue boats.
Italy’s cabinet approved the measure two weeks after the anti-immigrant League triumphed in European parliamentary elections.
However, it was watered down after Sergio Mattarella, Italy’s president, and rights group expressed alarm.
Draft versions of the decree explicitly referred to boats bringing refugees to Italy’s ports, but the final version makes no direct reference to refugee rescue boats.
Last month, United Nations human rights experts wrote to Italy to say the draft decree was an attempt to criminalise search and rescue operations carried out by humanitarian groups.
Mr Salvini has repeatedly accused charity rescuers of being complicit with people smugglers.
NGOs have denied any wrongdoing, but most have stopped operating in the Mediterranean due to Italy’s closure of its ports and repeated investigations by prosecutors.
Claudia Lodesani, president of Medicins Sans Frontieres (MSF) Italy, said: “A year after the announcement of the closure of its ports, the Italian government continues to target search and rescue operations in the Mediterranean, endangering the lives of vulnerable people searching for safety.
“Fining the captain or the ship owner of a search and rescue vessel is like fining an ambulance taking patients to hospital.”
She said the decree “threatens any vessel that rescues people in distress in its territorial waters with heavy fines”, which she said was “a breach of international maritime law”.
“Saving lives is not a crime,” Ms Lodesani added. “It is a legal obligation that EU member states should make a priority. But, once again, Italy shows little sensitivity to international obligations.
“Instead of working together with other European states to create a proactive and adequate search and rescue system, the Italian government criminalises sea rescue.”
The decision to close ports has caused several stand-offs between Mr Salvini and NGOs, but on 7 June the interior ministry allowed a cargo ship with more than 50 refugees on board to dock, after the Italian church said it would house them.
Refugee arrivals to Italy have plummeted since Mr Salvini took office, with 2,144 crossing the Mediterranean so far this year, according to official data, down 85 per cent on the same period in 2018 and down 96 per cent on 2017.
Almost 350 have died en route trying to reach Italy, UNHCR and IOM data estimates.
Additional reporting by agencies