Israeli police deployed in force throughout Jerusalem on Tuesday amid an annual march and as tensions simmered in the Holy City after two days of clashes with Palestinian youths.

"We are maintaining a state of alert and are deploying in force," Jerusalem police spokesperson Shmuel Ben Rubi told AFP, adding that about 2000 police officers and border guards were on the streets.

Thousands of people began to march through the streets of Jerusalem for the Jewish festival of Sukkot, with one march passing through the mostly Arab eastern part of the city. No violence was reported by early afternoon.

Tensions have run high in Jerusalem over the past several days after clashes broke out near the flashpoint site of the Al-Aqsa mosque compound, revered by both Jews and Muslims, on Sunday for the second time in a week.

On Monday, Palestinian youths hurled stones at Israeli police in several neighbourhoods of east Jerusalem, with one officer lightly wounded after being stabbed in the neck and 20 Palestinians arrested.

Israeli authorities continued on Tuesday to limit access to the mosque compound in the Old City to Muslim men aged 50 and over, with no restrictions for women. Jews and Christians were also prohibited.

This followed Sunday's clashes in which seven Palestinian protesters were injured and three arrested.

Amid the ongoing tension, Silvan Shalom, Israeli vice premier, told public radio that "the battle is underway for sovereignty over Jerusalem and particularly over the Temple Mount."

But senior Palestinian negotiator Saeb Erakat accused Israel of deliberately escalating tensions in east Jerusalem, warning that it was like "lighting matches in the hope of sparking a fire."

"What makes this all the more dangerous is the vacuum created by the absence of a credible peace process that offers hope instead of more settlements" on Palestinian land, he said.

Al-Aqsa tensions

Tension flared on Sunday near the Al-Aqsa compound, known to Muslims as Al-Haram Al-Sharif (the Noble Sanctuary) and to Jews as the Temple Mount.

The site of the Al-Aqsa mosque compound is the holiest in Judaism and third holiest in Islam, and it has often been a flashpoint for Israeli-Palestinian violence.

The second Palestinian intifada broke out there in September 2000 after a visit by Ariel Sharon, the right-wing politician who became Israeli prime minister the following year.

The annual Sukkot marches in Jerusalem, with participants varying from Israeli health enthusiasts walking for the sport to evangelical Christians from abroad marching to show support for the Jewish state, have increasingly taken on a nationalist flavour over the past several years.

Israel captured east Jerusalem in 1967 and later annexed it in a move not recognised by the international community and considers the city to be its "eternal, indivisible" capital.

The Palestinians want to make the eastern part of the city the capital of their promised state.