Protesters have gathered outside the city’s Legislative Council building.
The package will for the first time give citizens the right to vote for their chief executive, in 2017. But candidates will be vetted by a pro-Beijing committee.
Last September the city saw weeks of large-scale pro-democracy protests.
Hundreds of activists, comprising pro-democracy and pro-Beijing supporters, are outside the Legislative Council (LegCo) premises waving banners and shouting slogans.
Meanwhile amid heightened concern about security in the city, six people accused of a bomb plot appeared in court for a bail hearing. It was not known whether they were linked to the protests.
Hundreds of police officers have been deployed inside and outside the LegCo building.
One of the first speakers in the debate was Chief Secretary Carrie Lam, who warned against blocking the package.
“This administration cannot re-launch the (reform) process… political development will inevitably come to a standstill,” she said.
Outside, a pro-Beijing activist surnamed Chan told Reuters: “The bill needs to go through. We have to support Hong Kong stability. We cannot keep carrying on like this.”
But protester Fion Wong told AFP news agency: “I’m here to oppose the so-called democracy.”
“Passing it [the bill] would be a betrayal to those who have taken part in the Occupy movement,” she added, referring to the Occupy Central pro-democracy movement.
Hong Kong Divisive Political Reforms