"This is a net step backwards and a freeze in the sector of the media, in contradiction with international standards," Mohamed Mahmoudi of the Movement for a Peaceful Society (MSP), an Islamist member of the presidential alliance, told a plenary session of parliament.
Presenting the bill, Communications Minister Nacer Mehal said that the aim was "a better protection of journalists on the socio-professional front." "The government commits itself to respecting all freedoms and above all the freedom of expression in the framework of the laws of the republic," Mehal told the people's national assembly.
But critics like Hakim Messaoui of the Initiative for the Dignity of Journalists said, "We want a law on news and not a penal code." About 40 members of his grouping held a vigil outside parliament.
The new bill includes 132 articles, and is devoted particularly to the opening up of television to the private sector.
The controversy arises over clauses that "call for a panoply of ideological allegiances, like respect for national sovereignty (and) economic interests, expressions that are so vague that they hoist an intolerable sword of Damocles over the freedom of the press and expression," according to parliamentarian Ali Brahimi.
Algeria currently has five television channels, five national radios and 47 local radios, all owned by the state.
Said Bouhadja, a member of parliament for the National Liberation Front (FLN), backed the new bill, telling AFP that "this proposal places Algeria in a modern position and is an opening up" of the airwaves.
The media bill is among reforms promised by President Abdelaziz Bouteflika on April 15, in response to a wave of popular protest that was part of the Arab Spring. The law should be voted on by the end of January, which will mark the end of this parliamentary session, the last before elections in 2012.