The law also will make Spain a tougher place to smoke than many other European countries where bars and restaurants are still allowed to have smoking sections, and will prohibit smoking in outdoor places such as playgrounds and the grounds of schools and hospitals.
The current law put in place in 2006 prohibits smoking in the workplace, and workers puffing away just outside their office buildings are a common sight.
But that law aimed at cracking down on smoking permitted owners of most bars and cafes to decide on their own whether to allow smoking -- and almost all ended up doing so, leading critics to label the earlier law as a total failure.
Those bar and cafe owners will now lose the privilege, and larger restaurants that still have smoking sections will have to get rid of them. Officials predict thousands of lives now lost to secondhand smoke will be saved.
"I think the new law is good, especially if it helps us keep healthy," said Puri De Arcos, 33, as she puffed away in a park square. "But I think it is too radical, banning smoking in discos, for example."
Bar owners had been hoping to get an exception in the law to allow them to construct hermetically sealed smoking sections, but the parliamentary commission voted down that option. Hotels will be allowed to set aside 30 percent of the rooms for smokers.
The bill endorsed by Prime Minister Jose Luis Rodriguez Zapatero and his governing Socialist Party next goes for debate in the Senate where it is likely to be approved quickly or sent back with minor changes for approval in the lower house.
About the only concession that owners of smoke-filled establishments got was a pledge by the government for the law to take effect on Jan. 2 -- instead of a day earlier, the peak of Spain's weeklong spell of Christmas and New Year's festivities that draws huge crowds of Spaniards to bars and restaurants.
Salvador Chacon, who owns a small bar and smokes himself, expects to lose business because so many of his regulars come every day for beers and 'tapa' snacks and then automatically light up, often passing away hours drinking and smoking with their friends.
Chacon said any many others also fear Spain could lose crucial tourism revenue because it's the last European nation where travelers can feel free to smoke in eateries after sampling Spain's renowned food and tapas, almost always washed down with Spanish wine or half sized draft beers called 'canas.'
"The rest of Europe doesn't have the charming tradition of canas and tapas. It's our way of life and it's also what tourists look for," said Chacon.
Spain's main restaurant and bar federation predicted the law will lead to 145,000 lost jobs and a 10 percent decline in revenue for the sector, but the Health Ministry said similar laws put in place in recent years in nations ranging from Britain to France and Italy did not hurt business badly.
Health Minister Trinidad Jimenez noted that smokers will still be allowed to smoke on the open-air terraces of bars, and many Spanish bars have them, often setting up tables and chairs on the sidewalk. Other exceptions were provided for jails, psychiatric institutions and retirement homes.
Nonsmoker Miguel Gonzalez welcomed the law, saying he'll finally be able to breathe cleanly when he goes out for a coffee or a beer. And the bars themselves will be cleaner, because most Spanish bars let patrons stub their butts out on the floor.
"Given the time I have spent in this bar, I think I'm more of a smoker than a real smoker," Gonzalez said.
Spain's National Committee for the Prevention of Smoking says up to 1,000 Spanish bar waiters die yearly from lung cancer, mainly from breathing in so much second hand smoke.
Many more lives would be saved eventually in Spain by making it more difficult for smokers to puff away almost anywhere, said Dr. Jose Carreras who heads the anti-smoking unit at Madrid's Hospital Carlos III.
"When these measures are implemented, there is a much more noticeable decrease in people quitting smoking than at this moment," he said. "This means that in 20 years time there will be a decrease in deaths due to smoking related diseases."