The law was passed in parliament by 81 votes to 27, with one abstention.
The passing of the so-called jewelry bill allows the seizure of valuables worth more than 10,000 Danish kroner (about $1,453).
Items of "special sentimental value" such as "wedding rings, engagement rings, family portraits, decorations and medals" are exempted, according to the Danish Ministry of Immigration, Integration and Housing. But "watches, mobile phones and computers" can be confiscated, it says.
The legislation has been criticized across the political spectrum, appalling many in this northern European nation, which has a longstanding global reputation for tolerance and promoting liberal, social democratic values.
Rights group Amnesty International slammed the law, saying in a statement that it reflected a "dismal race to the bottom" by European countries in response to the migrant crisis.
"To prolong the suffering of vulnerable people who have been ripped apart from their families by conflict or persecution is plain wrong," John Dalhuisen, the group's Europe and Central Asia director, said in a statement.
"Today's meanspirited vote in Danish parliament seeks not only to pilfer the possessions refugees cling to, but also to needlessly lengthen their separation from their loved ones."
A fair deal, says government
Denmark's ruling Liberal Party says the legislation is about ensuring that asylum seekers contribute to the country's generous welfare state.
"All Danish citizens and refugees coming here receive universal health care; you receive education from preschool to university, and you receive elderly care; you receive language training and integration training free of charge, paid for by the government," Liberal Party spokesman Jakob Ellemann-Jensen told CNN's Christiane Amanpour last month
"The only demand that we set to measure this is if you have the means to pay for your housing and for your food -- regardless of whether you are a Dane or whether you are a refugee -- then you should."
Similar laws exist in Switzerland and Germany, according to officials there. Dozens of cases were reported in Switzerland of migrants' assets being confiscated to fund their living expenses, although in Germany it was unclear if, or how widely, the policy was enforced.
But others -- both backers and critics of the law -- say it has more to do with deterring further arrivals of migrants and asylum seekers who have entered Europe in numbers not seen since World War II.
"We hope this will start a chain reaction through Europe where other European countries can see there's the need to tighten the rules on immigration in order to keep European culture," said Martin Henriksen, spokesman for the right-wing Danish People's Party, which supports the law.
Lawmakers also voted to triple the period of time before asylum seekers can apply for separated family members to be reunited with them in Denmark.
That measure, which extends the period from one year to three, is expected to have an even greater deterrent effect on potential migrants.
"The aim is to make sure that (fewer) people come to Denmark, if it's hard to bring your family," Henriksen said.
Migrant mother deterred
One Syrian migrant in Denmark who spoke to CNN said she had no intention of remaining in the country because of the requirement, which would see her wait years to apply for her 9-year-old daughter, still in Syria
, to rejoin her.
"Sometimes I say to my friends, I'm scared that if I die here, my daughter won't know where her mother is buried," she said.
Anders Ladekarl, secretary general of the Danish Red Cross, called the law "really disturbing."
"Imagine leaving your family back home in a war zone, and you will have to sit in a Danish village or refugee center waiting for your family without being able to see them for three to four years," he said.
'An affront to dignity'
Many in socially liberal Denmark say they are appalled by the law, which the U.N. Refugee Agency has called "an affront to (refugees') dignity and an arbitrary interference with their right to privacy."
Wiebke Keson, a 72-year-old Danish refugee center volunteer, said she was "shocked" by the notion of confiscating jewelry.
"Since I'm German, I was immediately thinking about our own history," she said, voicing a common criticism that the policy echoes Nazi confiscations of Jewish valuables.
But the policy reflects a hardening of attitudes toward migrants across Scandinavia -- and Europe in general -- in the face of a historic influx of immigrants hailing predominantly from the Muslim world, many fleeing the war in Syria
Sweden and Germany are regarded as the most desirable final destinations for most of the more than 1 million migrants who entered Europe last year
, and both countries have proved the most hospitable to new arrivals.
But the ever-growing numbers of asylum seekers, combined with high-profile crimes blamed on migrants, have made the host populations wary and have gradually fed rising anti-migrant sentiment.
It's not only Denmark that has brought in tougher policies on migrants. In November, Sweden introduced tighter border controls and asylum rules to reduce the number of asylum seekers entering the country. And last week, Norway began deportations of migrants who had entered via a border with Russia
'It's impossible to integrate that number of people'
Anti-immigration parties have also received more support. In Sweden, the anti-immigration Sweden Democrats party has soared in popularity, polling at about 20% in recent polls
. Before 2010, the party had not won a single seat in the country's parliament.
Markus Wiechel, a parliament member for the Sweden Democrats who is the party's migration spokesman, says his party's fortunes rocketed over the past year as the effects of the migrant crisis appeared on Swedish society.
"Last year we received more than 170,000 asylum seekers in one year -- that's in a country with about 9.5 million people. Of course it's impossible to integrate that number of people in our society," he said.
The new arrivals placed an economic strain on Sweden's welfare system, he said, and disrupted the Swedish way of life. He said many Swedes felt "insecure" because of what he called increased violence and a rising Islamist threat, which he blamed on the new arrivals.
"We have to understand they have different ways of looking at life, they come from different cultures. They don't think the same," he said.
Blowback from Paris, Cologne
Key events have contributed to the hardening of public attitudes toward migrants across Europe, including the Paris terror attacks
in November and the mob sex assaults of women in the German city of Cologne
More than 900 people reported being attacked by men of North African or Arab appearance during New Year's Eve festivities in Cologne, 523 of them reporting having been sexually assaulted. Similar attacks were reported in cities across Europe, including in Sweden and Finland.
Many believed that authorities and the media had been slow to acknowledge the crimes in Cologne out of a misguided sense of political correctness. After the attacks, allegations emerged that authorities had covered up a similar wave of sexual offenses by migrants at a 2014 music festival in Stockholm, Sweden
. The city's police ordered an investigation of the allegations.
The killing of a 22-year-old refugee center worker by a 15-year-old asylum seeker
in the Gothenberg region of western Sweden on Monday has contributed to the tensions.
'We are still a very generous people'
For Ladekarl, of the Danish Red Cross, the Danish law, like similar policies aimed at curbing immigration, represents European countries pulling up the drawbridge.
Suppressing liberal Scandinavian principles of social justice and adopting hard-line policies toward migrants is unlikely to be successful, he said.
"There (is) no attempt to find a common European solution to this," he told CNN.
"Every country is now trying to fence themselves in, trying to scare refugees and asylum seekers away. And this is not going to work in the long run because we have a lot of people in need of international protection, and they're being pushed from one country to the other."
But for growing numbers of the political class in Scandinavian countries, the adoption of tougher rules toward migrants doesn't represent the abandonment of traditional values, but is a reflection of the new challenge they face.
They have already done their share, they say.
"We need to be able to control what is going on with the people coming to Denmark," Ellemann-Jensen, the Denmark Liberal Party spokesman, told CNN last month.
"Therefore, we are passing legislation that, yes, tightens up a bit.
"But we are still a very generous people (compared) to almost the rest of the world."
Wiechel, of the Sweden Democrats, agreed, saying the Scandinavian country remained a progressive society.
"We're still an open and tolerant country. The problem is the number of asylum seekers has never been this high. This affects the way society works," he said.