The bill, passed by the lower house of parliament on Friday, would make the use of phrases such as "Polish death camps" punishable by up to three years in prison.
To become law, the bill, which could yet be amended, must be approved by the Senate and Polish President Andrzej Duda.
"We will accept no limitation on truthful historical research," Netanyahu earlier told his cabinet.
"Our ambassador in Warsaw, at my instruction, spoke with the prime minister of Poland during last night's ceremony commemorating the Holocaust at Auschwitz, and emphasised these positions of ours," he said, referring to a service to mark the 73rd anniversary of the death camp's liberation.
Warsaw says the bill will not limit freedom to research or speak about the Holocaust.
"Jews, Poles, and all victims should be guardians of the memory of all who were murdered by German Nazis. Auschwitz-Birkenau is not a Polish name, and 'Arbeit Macht Frei' is not a Polish phrase," Morawiecki said on Twitter on Saturday.
The German phrase, which translates as "work sets you free", was set into the wrought iron gates at Auschwitz and other Nazi concentration camps.
The Polish Institute of National Remembrance (IPN) said that Poland had been in the past many times presented as an ally of Hitler, which made it necessary to protect its reputation.
Poland lost about 3 million of its non-Jewish citizens, including many of its intellectuals and members of the elites during World War Two. The capital Warsaw was razed to the ground in 1944 after a failed uprising in which 200,000 civilians died.
BILL BANS "POLISH DEATH CAMPS" REFERENCE
Yad Vashem, Israel's Holocaust remembrance centre, said the phrase "Polish death camps" would be a historical misrepresentation but that the bill was "liable to blur the historical truths regarding the assistance the Germans received from the Polish population".