The shift in policy, announced by the public security ministry late Monday, means that up to 600,000 Israelis could apply for gun licences, a dramatic increase on the current 140,000 civilians with permits.
A source in the public security ministry, however, estimated that only 35,000 people will be interested in applying for gun licences under the new regulations.
Public Security Minister Gilad Erdan said the change could help thwart "lone-wolf attacks" by Palestinians, who have carried out gun, knife and car-ramming assaults that have at times been deadly.
A number of people have been shot by accident, however, in the chaos resulting from such attacks, while Israeli security personnel have in some instances been accused of excessive force.
"Many civilians saved lives during attacks and, in an age of 'lone-wolf terror', the more trained civilians carrying arms, the higher the chances of thwarting attacks and minimising casualties," Erdan said in a statement.