"Expelling family members of Palestinian terrorists who aided attacks to Gaza will lead to a significant decrease in terrorist attacks," a spokesman for Netanyahu said on Twitter.
A wave of violence in Israel and the Palestinian territories since October has killed 180 Palestinians as well as 28 Israelis, an American, a Sudanese and an Eritrean, according to an AFP toll.
Most of the Palestinians who died in the violence were killed by Israeli forces while carrying out knife, gun or car-ramming attacks, according to Israeli authorities.
The Gaza Strip, hit by three wars with Israel since 2008 and run by Islamist movement Hamas, is under an Israeli blockade that severely restricts the movement of people and goods.
It also has one of the world's highest unemployment rates, and the UN development agency said in September that conditions there could make it uninhabitable by 2020.
The Palestinian enclave, separated from the occupied West Bank by Israeli territory, has remained relatively calm during the current wave of violence.
Attorney General Avichai Mandelblit has reportedly said previously that such expulsions would violate both Israeli and international law.
Netanyahu has come under heavy pressure from right-wing members of his coalition over the violence.
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