The Terrorist Asset-Freezing (Temporary Provisions) Bill passed all its stages considered in the House of Commons yesterday.
The government introduced the emergency legislation to keep the assets of suspected terrorists frozen.
The new legislation comes after the Supreme Court annulled the existing asset-freezing orders.
The government was required to gain an agreement from banks not to release the fund whilst the Bill is being passed.
A number of MPs expressed concern about the "draconian" nature of the legislation.
Opening the second reading debate, Treasury chief secretary, Liam Byrne argued "The cost of a terrorist attack is low, yet its impact is devastating".
"For that reason, we seek to fight back with every appropriate weapon, which must include control of finance, assets and cash. Without resources, terror networks are unable to plan, organise or execute attacks.
"Our tools therefore must include action against terrorist finance, which is now an important part of the UK's counter-terrorism strategy."
Byrne said the ruling meant there was "something like £16,500 linked to about 14 people which could, suddenly, have been made available".
"In these times of severe threat to our national security, we cannot afford to fail to take the necessary steps to disarm terrorists or to disarm them of their financial power," he said.
"Without primary legislation of the kind before the House today, we will leave gaps which will give flexibility and capability to people who intend serious harm to the British public."
Responding to concerns, Byrne said that alongside the temporary Bill, the government would publish a full Bill that will transpose the relevant orders into statutory legislation.
Arguing the case for why eight weeks was too long to wait for the legislation to go through, Bryne said :"It would have been unreasonable to ask the banks to keep the money frozen for the amount of time it would have taken the House to give the matter proper consideration".
Shadow Treasury minister, Mark Hoban lent his party's backing because "there need to be proper controls in place to prevent terrorists and suspected terrorists from having access to their financial resources and the financial system ".
But he added: "The Government needs to recognise that we are here tonight, pushing through this emergency retrospective legislation because the Government has failed, despite many warnings, to put the asset freezing regime on a proper legislative footing.
"The route available now to the Government -the emergency Bill today and a longer period of scrutiny-could have been the plan originally discussed between ourselves and the Treasury when the issue first arose.
"We could have had the emergency legislation before us today and the longer discussion period for the Bill, but when the Supreme Court issued its original judgment, the longer Bill was the preferred option."
Hoban questioned whether provisions in clause 2 are sufficient to protect banks and other financial institutions from claims made by those subject to the freezing orders if, between 4 February and Royal Assent, they sought to withdraw money from their bank accounts.
"In passing the Bill tonight, we are bailing out the Prime Minister and getting the Government out of a hole, but it is the right thing to do to safeguard our country", Hoban concluded.
Liberal Democrat shadow Treasury spokesman Dr, Vincent Cable questioned the entire validity of the legislation, and said the new measures lacked proper safeguards.
Cable said:
"The Bill has been described as very bad legislation.
"More importantly, in some ways, the legislation - not in our view but in the view of the Supreme Court justices - is unnecessary. That is why we remain highly sceptical about its validity."
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On the issue of reasonable suspicion, Cable asked what the right balance between absolute proof and reasonable suspicion was.
He said problems always arise when legislation is introduced very rapidly.
"Long before I got involved in politics, in the year I got married, which was just over 40 years ago, my wife and I discovered while we were making wedding preparations that her family and most of our friends who were British subjects were being declared stateless by the British parliament, because they happened to be east African Asians," Cable told the House.
"On the basis of a panic and "facts" that subsequently turned out to be wholly incorrect, they were, in effect, systematically stripped of their British citizenship.
"That was not the first case of fast-track legislation, and the Bill before us will not be the last, but we must learn from experience that legislation taken in great haste and panic is often very bad legislation."
Neil Gerrard (Lab, Walthamstow) said the legislation has a low standard of proof as well as being draconian it has an unacceptable effect on the lives of people caught up in it.
"For instance, in 2008, some people who were the subject of these orders wrote to the Treasury to ask whether it was permissible under the orders to buy new boots, trainers and shoes," he said.
"The Treasury responded that this raised complex issues about what constituted a basic expense as opposed to an extraordinary expense, and that these were matters for which ministerial approval would be required.
"That was the extent to which the orders were impinging on the lives of the individuals who were subject to them."
Andrew Dismore (Lab, Hendon), the chair of the joint committee on human rights, expressed "grave concerns" about the Bill.
Robert Syms (Con, Poole) complained about the lack of an appeals process.
"The important point to note is that it is very difficult to deny that you are a terrorist, if someone else has reasonable suspicion of that.
"How do you prove you are not a terrorist?"
Treasury exchequer secretary, Sarah McCarthy-Fry, stated that the aim was for the legislation to become law before the parliamentary recess on Wednesday.
She pledged to allow Parliament detailed scrutiny of a more comprehensive new regime before the temporary measures expire at the end of the year.
She said that the government’s aim was to "prevent a gap in the asset-freezing regime, and to ensure that frozen funds cannot be unfrozen and diverted and used tor terrorist purposes and that suspected terrorists do not gain free access to the United Kingdom's system".
She said making orders in Council under the UN Act, the government were able to establish our terrorist asset-freezing regime in law within 12 days of UN Security Council Resolution 1373.
She re-emphasised that the Supreme Court had not found the UK anti-terrorist asset freezing regime to be contrary to human rights, or to contain inadequate safeguards.
"We believe in the importance of striking the right balance between protecting national security and protecting human rights.
"While it is true that the asset-freezing regime has an impact upon human rights, we consider this interference to be necessary in the interests of national security and public protection, and consider it proportionate to those ends", McCarthy concluded.
The Bill was read a second time and committed to a Committee of the Whole House.
After that was completed, McCarthy-Fry opened third reading of the Bill.
"We consider the Bill to be necessary to the United Kingdom's national security. It will enable us to act swiftly in order to maintain the asset-freezing regime under the Orders in Council on a temporary basis", she said.
Hoban said "we accept the reality that we must help them to get out of that mess so that we can ensure that there is a proper regime to freeze terrorist assets".
Howarth said "We believe that more time was available at this stage to allow us to consider the Bill more carefully".
The Bill was read a third time.
