The City Council overwhelmingly approved legislation yesterday that caps so-called “pay to play” contributions from those who have business with the city.

While supporters say the legislation will largely remove influence peddling from government decision-making, critics say there is an unfair exemption for labor unions, which tend to give hefty donations to City Council members. At least one lobbyist has said he is preparing to challenge the measure in court.

The legislation is a joint effort between the Bloomberg administration and the speaker of the City Council, Christine Quinn. The speaker said the legislation would be a national “gold standard” and that there is no “loophole” in the law.

The chairman of the council’s government operations committee, Council Member Simcha Felder, a Democrat of Brooklyn, said that while the bill is “not perfect” and that there are “naysayers and the kvetchers,” it goes a long way toward shining a light on who is getting money from whom. Mayor Bloomberg has said he would have preferred union contributions to be capped, too, but called it “the most comprehensive pay-to-play reforms in the country.”

The bill expands the ban on corporation contributions to include limited liability corporations and partnerships, and caps contributions at $250 for citywide races, $320 for borough-wide races, and at $400 for lobbyists, for those who have $100,000 worth of business with the city, and for property owners with land-use applications.

Individuals not affected by the law can donate $4,950, $3,850, and $2,750 to citywide, borough-wide, and council candidates.

The council also approved an overhaul of the city’s 1960s-era building code yesterday.