In her New Year speech, Tsai, seeking re-election, said the law would protect Taiwan's democracy from any illegal attempt to sabotage the island's unity, freedom, and liberty, the Efe news reported.
"It is true that Taiwan, being at the frontline against China's pressure, (is) a victim of constant interference and infiltration by China. We do need such a law to make Taiwan safer so that the society would not be divided by infiltration and interference," the President said.
The Taiwanese government - led by Tsai's Democratic Progressive Party - brought the contentious law to thwart attempts like foreign political funding and spreading of misinformation by foreigners in order to impact elections or the work of the government of Taiwan.
Any violation of the law - which was passed by the parliament, where the DPP enjoys a majority - would invite a five-year prison term and a fine of up to 10 million Taiwanese dollars approximately ($3,35,000).
On Wednesday the president said China in recent years had repeatedly threatened Taiwan with a "very clear" goal of forcing the island to "give up on its sovereignty".
Tsai rejected offer of inclusion in the "one country, two systems" political framework that the Chinese government has extended to Taiwan if it agrees to be merged with the mainland.
She expressed her "gratitude to all of the Taiwanese people for their greatest support to the government for our firm stance on telling the whole world that Taiwan will not accept the 'one country, two systems'."
The President said such a political arrangement had failed in Hong Kong, a semi-autonomous region that has been rocked pro-democracy and anti-Beijing protests for over seven months now.
Chinese President Xi Jinping proposed the 'one country, two systems' for Taiwan last year as Beijing continued to build up its pressure on the island to come under its control.
China considers Taiwan - a de facto sovereign nation since the end of a civil war in 1949 - as its territory.
As Taiwan readies to hold a presidential vote, the campaign has been marred by allegations of Chinese intervention to influence the polls.
An alleged Chinese spy, Wang Liqiang (26) claimed in the run-up to the election that Beijing was directly interfering in the island nation's politics.
Wang claimed he was assigned to meddle in the election as China's intelligence agencies were trying to disrupt democracy, not only in Taiwan but also in Hong Kong. The allegation was dismissed by China's Taiwan Affairs Office as "nonsense".
He also claimed to have financed the campaign of pro-China candidate Han Kuo-yu's, Tsai's main rival, who represents Taiwan's main opposition party Kuomintang (KMT).
The KMT did not participate in the parliamentary vote on the infiltration law and criticised the legislation as a "green terror" to "intimidate" the government's critics.
Han, and the KMT, advocate improving ties with Beijing within the framework of the "one-China policy" that doesn't recognize Taiwan as an independent state but a part of China.
According to a survey published Monday by the Taiwanese Public Opinion Foundation, Tsai was predicted to win the elections with 52.5 per cent votes.
Han was expected to get 30.6 per cent support, although the pre-poll survey said 35 per cent of the voters had not made their final voting choices.
( With inputs from IANS )