The measure will now be in effect until December 25, 2025, local media reported on Tuesday, after lawmakers voted in favour of the proposal.
The state of emergency enables the government to issue emergency decrees.
Hamas militants and other Palestinian extremists triggered the Gaza war by crossing into Israel and attacking Israeli communities on October 7, 2023.
More than 1200 people were killed and around 250 others were taken hostage. Around 100 are still inside the Gaza Strip, at least a third of whom are believed to be dead.
Israel subsequently declared a state of emergency, which was later extended.
Israel's air and ground offensive has since killed more than 45,200 Palestinians, according to Gaza's health ministry.
In a Christmas message Israeli Prime Minister Benjamin Netanyahu addressed Christians around the world.
"At a time when Israel is fighting on seven fronts, we deeply appreciate the steadfast support of our Christian friends around the world," Netanyahu said in a statement released by his office on Tuesday
"We seek peace with all those who wish peace with us, but we will do whatever is necessary to defend the one and only Jewish state.
"Israel leads the world in fighting the forces of evil and tyranny, but our battle is not yet over.
"With your support, and with God's help, I assure you, we shall prevail."
Benjamin Netanyahu:— Vivid.🇮🇱 (@VividProwess) "My dear Christian friends, as you gather with your family this Christmas, I wish the Christian community in Israel and around the world blessings for a Merry Christmas from the Holy Land. You've stood by our side as Israel defends our civilization." pic.twitter.com/CjwGxrHG7XDecember 24, 2024
In an earlier address Mr Netanyahu said "some progress" had been made in efforts to reach a hostage and ceasefire deal, although he added he could not give a time frame for a possible agreement.
"We are taking significant actions through all channels to return our loved ones. I would like to tell you cautiously that there is some progress," he told the Knesset on Monday.
In other developments, the Israeli army had reportedly ordered the evacuation of a hospital in the contested northern Gaza Strip.
Palestinian news agency Wafa reported that patients had to leave the hospital in Beit Lahia and that Israeli forces were besieging the facility.
There was no confirmation from Israeli officials about the operation.
According to Wafa, there were attacks near the hospital.
Since the beginning of the Gaza war a year and a half ago, there have been repeated skirmishes in and around hospitals in the coastal strip.
According to the UN, hospitals have repeatedly been the target of massive attacks.
Israel accuses the Islamist terrorist organisation Hamas of using hospitals and other civilian facilities as command bases or weapons stores.
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