"UNHCR reiterates its concern that imposing financial or other penalties on shipmasters could deter or impede sea rescue activities by private vessels at a time when European states have largely withdrawn from rescue efforts in the Central Mediterranean," said the agency's spokesman Charlie Yaxley.
"NGOs play an invaluable role in saving the lives of refugees and migrants attempting the dangerous sea crossing to Europe. The commitment and humanity that motivates their activities should not be criminalised or stigmatised," Yaxley underlined.
His comments came after Italy's populist government comfortably won a confidence motion in the upper house Senate late on Monday on the decree by 160 to 57 with 21 abstentions.
The vote was a victory for hardline Interior Minister and Deputy Premier Matteo Salvini, who drafted the legislation aimed at ending migrant landings in Italy.
Since taking office in June last year, Salvini has waged war against NGOs that save migrants in the Mediterranean, whom he accuses of abetting illegal immigration - claims which Italian magistrates have not been able to corroborate.
As part a series of measures to prevent migrant rescue vessels from arriving, including port closures, with European Union backing, Italy has continued to train and equip war-wracked Libya's coastguard to intercept migrants off its coast and return them to shore, a policy that Yaxley decried.
"NGO and commercial vessels must not be requested to transfer rescued people to the Libyan coastguard, or directed to disembark them in Libya.
"The extremely volatile security situation, ongoing conflict, widespread reports of human rights violations and routine use of arbitrary detention for people disembarked back to Libya underline the fact that it is not a viable place of safety," Yaxley said.
Yaxley said UNCHR called on European Union states to establish a temporary mechanism to redistribute rescued migrants, urging them to build on "encouraging" talks held in Paris last month by EU foreign and interior ministers.
"These talks were encouraging and should progress further in the interests of all," he added.
French President Emmanuel Macron told reporters last month that ministers from 14 EU countries had agreed at a meeting in Paris with a Franco-German initiative to redistribute migrants.
Macron did not spell out the specifics of the initiative but said it would be "quick" and "automatic".
( With inputs from IANS )