Officials announced the veto, on Thursday, shortly after US President Donald Trump publicly urged Israel to bar the visit by Democratic representatives Ilhan Omar of Minnesota and Rashida Tlaib of Michigan, Efe news reported.
"The decision has been made, the decision is not to allow them to enter," Israeli Deputy Foreign Minister Tzipi Hotovely told Reshet Radio.
Omar, a Somali refugee, and Tlaib, the Detroit-born daughter of Palestinian immigrants, made history last year when they became the first Muslim women elected to Congress.
Both are outspoken critics of the right-wing government of Israeli Prime Minister Benjamin Netanyahu.
Israel's interior ministry said in a statement that the determination to exclude Tlaib and Omar was reached "after Minister (Aryeh) Deri was convinced that (the visit) was part of boycott activism against Israel."
"The state of Israel respects the US Congress as part of the close alliance between the two countries. But it is inconceivable that Israel would be expected to let into the country those who wish to hurt it, including by means of the visit itself," the ministry said.
Deri remains open to considering a request from Tlaib to visit her relatives in the West Bank "for humanitarian reasons," the statement said.
Confirmation that the congresswomen would be kept out followed a Trump tweet urging Israel to exclude them.
"It would show great weakness if Israel allowed Rep. Omar and Rep. Tlaib to visit. They hate Israel & all Jewish people, & there is nothing that can be said or done to change their minds. Minnesota and Michigan will have a hard time putting them back in office. They are a disgrace!," the US president wrote.
This is not the first time Trump has targeted Tlaib and Omar, who are half of a quartet of first-term Democratic lawmakers known as "The Squad."
Trump has accused the two Muslim women and their colleagues, Ayanna Pressley of Massachusetts and Alexandria Ocasio-Cortez of New York, of hating the US, telling them they should "go back" to their own countries, though all but Omar were born in the United States.
The Netanyahu government's decision to bar Omar and Tlaib spurred criticism from the Israeli left.
"Israel has always banned Palestin from their land and separated us from other Palestin, but this time the Palestinian is a US congresswomen," Ayman Odeh, the leader of the Arab Joint List in the Knesset, said.
"@RashidaTlaib didn't even have to land to expose the true face of Israel's occupation," Odeh tweeted.
Nitzan Horowitz, who chairs the Democratic Camp in the Knesset, characterized the ban as a "grave mistake."
"This isn't just a confrontation with the (US) Democratic Party, which has always supported Israel, it's also a more basic issue: Israel is a free and democratic country, and in such a country you don't deal with criticism by entry or exit bans," he wrote on Twitter.
The Israeli ambassador in Washington, Ron Dermer, said last month that Israel would not deny entry to a member of Congress even if he or she was a BDS advocate.
In 2017, the Knesset passed a bill authorizing the government to prohibited foreigners who support BDS from entering Israel, a measure cited by Netanyahu in defence of Deri's decision.
"Israel is open to all critics and any criticism, with one exception: the law in Israel that prohibits entry to people calling and advocating for boycotting the country, just like in other democracies that bar entry to those who they believe will do harm to their nation," the prime minister said.
While Trump applauded the Israeli government for barring Tlaib and Omar, most of the reaction from Washington was negative.
House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer - both staunch supporters of Israel - criticized the decision.
AIPAC, the most powerful pro-Israel lobbying organisation in the US, likewise found fault with the exclusion of Omar and Tlaib.
( With inputs from IANS )