Lebanon passed a law on Tuesday granting Palestinian refugees here the same rights to work as other foreigners, a step in ending years of discrimination that had restricted them to the most menial of jobs.

A bill was approved after months of debate in Parliament that cut across decades of history in Lebanon and the rest of the Middle East, where the refugees’ fate remains a pressing question. While about 4.7 million refugees from the Arab-Israeli wars of 1948 and 1967 are spread across the region, many of them in the West Bank, Gaza, Jordan and Syria, the estimated 400,000 in Lebanon have endured some of the most wretched conditions.

Their status in Lebanon has long divided lawmakers here, another point of contention in a decades-old debate over the country’s already complicated and tenuous system of sharing power among Christians, Sunni Muslims, Shiite Muslims and Druse. Because most refugees are Sunni Muslims, opponents of giving them more rights have feared their eventual citizenship would give more power to Lebanon’s Sunnis.

In the end, the bill was a step forward in improving their status, but fell far short of alleviating their isolation in 12 camps scattered across Lebanon, where many rely on employment with United Nations agencies or settle for low-paying jobs in construction and services. Human rights groups have called for more reform on issues like refugees’ rights to property and inheritance.

“We agreed to give Palestinians the minimum of rights, which would improve their living conditions, and this was necessary,” said George Adwan, a Christian lawmaker who had initially objected to the bill. “We only took into consideration their conditions, but we haven’t moved any closer to making them citizens.”

The law lifts restrictions on Palestinians’ employment in the formal labor market, though they would still be officially treated as foreigners. They would be barred from working as engineers, lawyers and doctors, occupations that are regulated by professional syndicates limited to Lebanese citizens.

Though the law fell short of some refugees’ hopes, many welcomed it, in particular the law’s granting of access to social security benefits to refugees.

“I am 51 years old, born and raised here, and this is the first time I feel like I am a human being,” said Abu Luay Issawi, who owns a grocery store in Mar Elias, a refugee camp in Beirut.

Electricity was out in the camp on Tuesday. No water was running, as is the case almost every day in Mar Elias, which is overcrowded and lacks basic infrastructure.

Mr. Issawi said he had graduated among the top of his class from Beirut Arab University more than two decades ago with a degree in engineering, but was never able to find a job here. “I don’t remember anything about engineering,” he said. “But it is nice to know that my son will have a better future.”

His neighbor interrupted him. “If I am going to live and die here, then I want all my rights,” Youssef Ahmad, 52, said.

His sentiment underlined the broader context of Tuesday’s law. Beyond Lebanon, the refugees’ fate remains one of the most emotionally charged issues in the Israeli-Palestinian conflict. Palestinian negotiators have demanded at least partial repatriation of the refugees and their descendants, but Israel has refused, saying an influx of Palestinians would change the country’s demographics. Many in Lebanon believe that resolution of the refugees’ permanent status awaits Israeli-Palestinian negotiations.

Human rights activists in Lebanon said hurdles still remained, although they described the legislation as a crucial, albeit long-delayed step in improving Palestinians’ conditions here.

“This should be the start and not the finish line in the march toward achieving human rights for Palestinians,” said Nadim Houry, the director of Human Rights Watch in Lebanon.

Others worried that the day-to-day reality of Palestinian refugees might not change all that much. Employers will still probably be more inclined to give jobs to Lebanese citizens, given the bureaucratic hurdles of securing permits to employ foreigners.

“It’s not a full congratulation,” said Samira Salah, a Palestinian human rights activist. “For the outside world, it may be considered an achievement, but for Palestinians not so much.”

Palestinian refugees, who constitute nearly a tenth of the country’s population, have long been denied basic rights in Lebanon. They are not allowed to attend public schools, own property or pass on inheritances, measures Lebanon says it has adopted to preserve their right to return to their property in what constitutes Israel now.

The legislation does not address any of those issues, though some lawmakers have said they may push for greater rights in coming months.

“The second battle is the right to own property,” said Walid Jumblatt, a lawmaker and Druse leader who introduced the legislation in Parliament.