David Bitan, chairman of Netanyahu's governing coalition and a lawmaker from the premier's Likud party, said it would have been better if Arab Israelis "didn't go to the polls at all", in comments broadcast by Channel 10 television station.
"Ninety-five percent of them (Israeli Arab voters) vote for the Joint List, which doesn't represent the Arab Israelis but Palestinian interests," he said.
The Joint List holds 13 of the 120 seats in parliament, and is the third largest bloc in the legislature.
The head of the Joint List reacted on Twitter, accusing Bitan and the Israeli government of "racism".
Arab Israelis -- who make up around 18 percent of Israel's population -- are the descendants of Palestinians who remained on their land after the creation of Israel in 1948.
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Although they are citizens of the Jewish state, they largely see themselves as Palestinians.
Bitan was replying to a question about controversial comments Netanyahu made during the March 17, 2015 elections, appealing to his supporters to go to the polls to counter a high turnout among Arab Israelis.
The premier said at the time: "The rule of the rightwing is in danger. Arab voters are going to the polls in droves!"
Bitan has also made controversial statements.
Last month, he faced criticism for saying the Facebook posts of journalists showed they wanted to impose a "leftwing" agenda in public broadcasting.
In October, he called for a rights group chief who condemned Israeli settlement construction at the United Nations to be stripped of his citizenship.
The government that emerged from last year's elections is one of the most rightwing in Israel's history.