Frank Engel, a centre-right MEP from Luxembourg, told Politico "these are the practices of a banana republic which must be rigorously counteracted within the EU.
And senior Socialist MEP Ana Gomez said such schemes put the integrity of the Schengen system at risk.
Malta has issued almost 700 passports to wealthy individuals in exchange for cash in the past two years, generating at least €200 million.
The programme requires a €650,000 contribution to a national development fund and an investment of €150,000 in government stocks or bonds. A spouse or a child costs up to €50,000.
In return, an investor gets Maltese passport that provides visa-free travel to at least 166 countries. Applicants must also own property worth at least €350,000 in Malta for at least a year.
MEPs are arguing that citizenship is something that has to be earned and not bought.
The Maltese government, however, has defended the programme, saying applicants were thoroughly scrutinised with 25 per cent of applications being rejected.