Employing 'immediate family members' will be punishable by fines of €45,000 and up to three years in prison under the new law.
That means no hiring of spouses, children, or parents.
And politicians who wish to employ more distant family members, such as cousins or a spouse's non-immediate family, for example, will be under obligation to report this. That's also the case for 'cross-employment', or politicians hiring the family members of another MP or minister.
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France's National Assembly voted through the measure, first proposed in June, with a show of hands on Thursday morning.
The new law will apply both to ministers and MPs, roughly one in six of whom currently employs a family member. The measures form a key part of President Emmanuel Macron's flagship bill "for the moralization of public life" and is one of the new government's first laws to be approved.
All parliamentary groups had been in favour of applying the ban to government ministers, however there was some opposition to its extension to members of parliament.
Julien Aubert, of the Republicains party, compared the bill to dealing with swine flu. "One pig is sick, so you slaughter the whole flock," he said, according to Le Figaro.
But Justice Minister Nicole Belloubet warned MPs that "any retreat in this matter would be very badly perceived".
The issue of politicians hiring family members was brought into the spotlight by the 'fake jobs' scandal widely seen as the downfall of presidential candidate Francois Fillon.
In late January, French media revealed that Fillon's wife Penelope had received nearly €900,000 for a job as his assistant - despite very little evidence of her doing any such work in a scandal that became known as "Penelope gate".
He had also paid two of his children for jobs related to his government role, and the inquiry into the scandal is still underway.
Fillon's support plummeted following the revelations, eventually being knocked out in the first round of the elections after previously being widely seen as the favourite to win.
Centrist Emmanuel Macron, who was elected President in the May election, promised during his own campaign that he would try to end the practice.
The Macron administration is planning a separate crackdown on how MPs use their allocated budgets.
Each member of parliament currently receives an annual €130,000 budget on top of their pay, and the new government says there are not enough checks in place as to how these funds are used.