The Labour Party says a new law banning gang insignia from public buildings is not necessary.
The member's bill, in the name of National MP Mark Mitchell, passed its third and final reading by 69 votes to 51 in Parliament on Wednesday night.
It gives the police greater powers to seize gang insignia from government and local council premises, as well as schools and police stations, and to arrest gang members from 34 known gangs including Black Power, Killerbeez and Tribesmen.
But Labour's deputy leader, Grant Robertson, says there is currently nothing to stop ministers or schools from banning gang patches.
"We don't believe the bill's necessary," he says. "We think that if government buildings want to restrict what people wear, they already can - a lot of courthouses do that. We also think that if the Government really wanted to do something about attacking gangs, this legislation isn't it."
The justice advocacy group Just Speak says the law will have no positive effect. Spokesperson Danielle Kelly says the ban will give the appearance of addressing the problem without looking at the underlying issues or reducing organised crime.
Ms Kelly also says that making it a criminal offence to simply wear a gang patch is a breach of individual rights.
The Government says the law will help in the fight against organised crime.