"There is no doubt that the volunteers took a significant part and did hard work, both physically and mentally," said Passal, according to The Jerusalem Post.
"They were a significant part of the holy work for the people of Israel and worked together with the IDF, so they deserve to be rewarded for their important work."
Another bill proposes deporting the families of "terrorists" if they "knew in advance of the terror attack, expressed support for it, or issued words of praise, sympathy, or encouragement for the act of terrorism".
Meanwhile, a cross-party petition in Israel's parliament has been launched calling for a permanent cut to funding to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), Ynet has reported.
Key donors - including the US, UK, and Germany - have frozen funding to the UN Palestinian refugee agency after Israeli claims that some of its workers were involved in the 7 October events.
Israeli MKs want this suspension of funding to be permanent, at a time when the agency is struggling to provide life-saving aid to millions of displaced people in Gaza, who are at grave risk of disease and famine.
Israel has since revised its claim of 12 members of UNRWA being involved to six and there have been doubts cast over the allegations of a UNRWA-Hamas link by media.