Potential jihadists affected by the law would have their ID card confiscated for up to three years and replaced with a new one that does not allow them to travel outside Germany.
The original draft law was to confiscate the regular ID cards for only 18 months.
The law already allows authorities to confiscate the passports of people suspected of having terrorist connections.
But many German citizens who have gone to fight for terror groups, including Isis, in conflict zones such as Syria and Iraq have travelled via Turkey using just their national ID card to cross borders.
Hans-Georg Maaßen, chief of Germany's internal security service the Constitutional Protection Agency (Verfassungsschutz), told ARD television on Sunday that his agency was observing at least 180 such "foreign fighters" who have returned to the country.
"In many cases these people have been radicalized, have combat experience, have been brutalized," Maaßen said.
"In some cases we don't know that they've returned, they come back to Germany secretly. We're striving to work out where they're staying, we work through a checklist for everyone who returns... and if there's enough evidence then we bring charges against them."
But he added that following the attacks on satirical newspaper Charlie Hebdo, a Jewish supermarket and police in Paris, "closer co-operation between intelligence services is now indispensable."
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Asked about the threat of further attacks in Europe, Maaßen said that "we must remain calm and master the situation with a sense of proportion. Panic and hysteria are no help.
"Personally I'm calm and composed."