The bill was voted through after heated debate over an amendment introduced by Communist Andre Chassaigne to protect against GMO contamination of other crops.
The amendment makes it compulsory for farmers to "respect agricultural structures, local ecosystems and non-GMO commercial and production industries".
Socialist delegates said the amendment was a "major advantage for GMO-free cultures", since it represented a legal basis to exclude GMO from certain zones and protect against cross-contamination.
Greenpeace says it will have little impact without a proper definition of GMO written into the bill. Under the new bill France's High Council on Biotechnology will be responsible for defining what "non-GMO" means in terms of production for crop varieties. However this is likely to lead to controversy.
According to a report in French paper Liberation, the concept of non-GMO today has "no legal basis". The only existing law relates to labelling on food products and instead defines products "with GMOs". For the UMP minister Jean Bizet, "non-GMO is therefore below 0.9 per cent". However the Greens claim that levels are detectable at 0.1 per cent.
"We think they'll say that non-GM means a little GM, or up to a threshold of 0.9 per cent," said Apoteker. "That means the law is going to legalise contamination with GMOs. This fails to protect GMO-free agriculture."
The recently approved bill has been supported by most French farmers who are growing increasing amounts of genetically modified crops. French GM crop cultivation experienced the greatest increase in Europe last year, quadrupling in size from 5,000 hectares in 1996 to over 21,000 hectares.
But there is also a powerful opposition lobby, made up of environmental groups like Greenpeace and activists such as Jose Bove.
One of their main concerns is that pollination could cross-contaminate non-GM crops grown in the vicinity - and that ultimately the long-term health effects of GM on humans are not known.
"Although we back the amendment, we still think they should reject this law and put a better one in place," said Arnaud Apoteker, Greenpeace GM campaigner.
The bill will return to the lower house of parliament, or National Assembly, in the second half of May before becoming law. The opposition fears however that the amendment may be completely re-written when it returns for the second reading.
France's President Sarkozy introduced a ban on new cultivation of GMO crops in France last October after a government committee said it had found new evidence of damage that GM crops could cause to diversity and the environment.
The recently passed bill is however in response to European Union demands that member states formulate laws on GMO use.