The move will strike a blow to Erdogan’s ally-turned-rival Fethullah Gulen, for whom the schools are a major source of income, as he stands accused of seeking to topple the government with a damaging corruption scandal.
The Bill, which was approved late on Friday, sets 1 September 2015 as the deadline to close down the network of schools.
There are around 4,000 private schools in Turkey, including an unknown number of preparatory schools run by Gulen’s movement.
Tensions have long simmered between Erdogan and Gulen, who once worked hand-in-hand as the conservative pro-business middle class rose at the expense of the military and former secular elite.
But they reached breaking point in November when Erdogan’s Islamic-rooted government first floated the idea of shutting down the schools, which aim to help students prepare for high school and university.
Erdogan said at the time he wanted to abolish an unfair education system.
“Those who benefit from these courses are the kids of rich families in big cities," said the premier, who himself hails from humble roots and has tried to cultivate an image as a man of the people during his time in office.
Eyup Kilci, deputy principal of the Gulen-affiliated Guvender school network in Ankara, condemned the new legislation, telling AFP it gives Turkey the unenviable distinction of being “the only country which bans education activities".
Erdogan’s feud with Gulen escalated in mid-December, when dozens of the premier’s political and business allies were detained in police raids on allegations of bribery in construction projects, gold smuggling and illicit dealings with Iran.
Erdogan accused so-called Gulenists implanted in Turkey’s police and judiciary of instigating the corruption probe in a bid to undermine his government ahead of local elections on 30 March and presidential elections in August.
He retaliated by sacking hundreds of police and prosecutors believed to be linked to Gulen.
The scandal, which brought down four ministers and prompted a cabinet reshuffle, has evolved into the most serious challenge yet to Erdogan since his Justice and Development Party (AKP) came to power in 2002.
This week, the graft controversy widened to directly implicate Erdogan himself, after recordings were leaked online in which the premier can allegedly be heard discussing hiding large sums of cash and conspiring to extort a bribe from a business associate.
The incriminating tapes have prompted the opposition to call for Erdogan’s resignation, while angry residents have staged protests against government corruption.
In a fresh rally on Saturday, some 600 protesters took to the streets in Ankara, shouting “They are thieves" and “Government, resign!".
Some demonstrators were seen handing out fake euros in a mocking reference to the leaked audio tapes, which the government insists were fabricated.
At an election rally in the northwestern city of Kirklareli, Erdogan accused Gulen loyalists of “espionage" that threatened national security and warned that they would pay a “heavy price".
“They wiretapped Turkey’s very confidential and very strategic conversations, and disclosed them to other (enemies)," he said. “Can there be such treachery and lowness?"
Observers say Gulen’s Hizmet (Service) movement risks losing millions of dollars in revenue once its Turkish educational institutions are closed down under the new legislation.
In other attempts to contain the political crisis, Erdogan’s government has recently also pushed through legislation tightening state control over the Internet and the judiciary, raising questions at home and abroad about the state of democracy in Turkey.
Gulen, who has been living in the United States since 1999 to escape charges of plotting against the secular state by the then-government, has denied any involvement in the corruption probe.
The Hizmet movement also runs an estimated number of 500 private schools around the world. AFP