ALLIANCE'S Kellie Armstrong heralded a "historic day" in the assembly after her integrated education bill won support from a majority of MLAs.
A DUP move to block the legislation using a petition of concern failed as it did not gain enough support.
The new law was supported by 49 assembly members, with 38 voting against it and one abstaining.
Minimum targets will now be put in place for the numbers of pupils educated in integrated schools.
Currently, just 7 per cent of schoolchildren are educated in the intergrated sector.
But DUP Education Minister Michelle McIlveen warned that the bill was "fundamentally flawed" and would have "far-reaching" consequences for the north's education system.
Church leaders and grammar schools' representatives have also spoken out against the bill, which they argue prioritises the integrated sector over others.
The DUP's attempt to block Ms Armstrong's private member's bill with a petition of concern failed after the Ulster Unionists refused to back the assembly's veto mechanism, leaving Sir Jeffrey Donaldson's party two signatures short of the 30 threshold.
However, UUP MLAs did join the DUP and TUV leader Jim Allister in voting against the legislation
Speaking after the vote, Ms Armstrong said integrated education was "enshrined in the Good Friday Agreement" and was needed as a "vehicle for change".
"It is not the panacea to fix all wrong with our education system or even with Northern Ireland itself, but, more young people growing up together and being educated together will help move us forward," she said.
The Strangford MLA said it was "disappointing some parties saw fit to vote against integrated education" but said the outcome of the vote marked a "historic day for the entirety of Northern Ireland"
"No longer will integrated education have to rely on the whims and political position of the education minister of the day but rather parents and children who want to access integrated education will be able to do so, no matter where they live," she said.
DUP MLA Diane Dodds said everybody supported "integration and children being educated" but that the Alliance bill was "more about what sign is above the door than the diversity of the classroom".
She said the legislation "placed ideology above any educational outcomes".
"Indeed, it is a bill which is entirely silent in relation to any issues about the quality of educational provision in either integrated schools or schools in any other sector," she said.
"One of the biggest ironies however is a bill which has sought to elevate integrated schools in terms of resources and funding would fundamentally damage the education they can provide."
Ulster Unionist leader Doug Beattie said his party was "absolutely committed to a single education system" but that the bill would not deliver that.
"The Ulster Unionist Party voted against the Integrated Education Bill because it is imbalanced and pits one education sector against another," he said.
During the debate, Sinn Féin's Pat Sheehan said there had been a "lot of hysteria and misrepresentation" about the bill.
"Talking about supremacy is just arrant nonsense," the deputy chair of the education committee said.
SDLP MLA Daniel McCrossan said there were "issues" with the bill but that his party brought a number of amendments.
"We have been the bridge builders in trying to find solutions to ensure that we improve this bill to get this bill to a level that is satisfactory and does not disadvantage other children," he says.
