Beneath Jerusalem’s main cemetery at Givat Shaul, one of several huge new tunnels disappears into the hillside.

Inside the hill, the tunnels branch into a grid of three “avenues” and seven “streets”. Looking up from the centre of the grid, an imposing shaft rises dozens of metres to the cemetery garden above.

In places the concrete-lined walls of the cavernous interior are perforated with neat lines of tubular holes. A construction worker is lifted to one of the holes in a cherry picker. He hauls out dirt with his bare hands and then crawls inside the tube, leaving only his boot soles visible.

Two metres deep, the holes are burial niches, punched into the limestone and dolomite bedrock with a nine-tonne bore. Soon they will serve as graves in Israel’s giant new catacombs.

Israeli workers at the construction site of underground burial tunnels. Photograph: Abir Sultan/EPA

The new subterranean city of the dead is Israel’s most high-profile attempt yet to solve an unusual crisis: a shortage of places to bury to its dead.

Cremation is uncommon in Israel, and on present estimates Jerusalem alone requires space for 4,400 new graves a year. The underground area set aside for the catacombs project will contain about 22,000 crypts in the first instance, at about four times the density of the cemetery above.

The problem that the new $50m (£37m) project is designed to solve is starkly visible above ground. Where the hillside is not covered by conventional grave sites dug into the ground, multi-storey burial structures have been constructed over the past two decades, some looking like multi-storey car parks with levels open to the air.

When the new underground graveyard is finished, about 300,000 cubic metres of bedrock and rubble will have been removed from the site.

A worker uses a cherrypicker to access one of the burial niches. Photograph: Peter Beaumont/The Guardian

The main shaft will be lined on four walls with 3,000 graves rising to the surface, serviced by lift. The whole site – being built for Chevra Kadisha, one of Jerusalem’s largest burial societies – will be accessible by electric golf carts. A small museum on the bottom level will display archaeological artefacts associated with Jewish burial traditions.

The catacombs are the brainchild of Arik Glazer, the chief executive of Rolzur Tunnelling, a company usually associated with more conventional civil engineering projects such as motorway tunnels.

“There are 200,000 spaces here,” Glazer said of the old cemetery at ground level. “Not all are taken but what everyone accepts is that there is a growing lack of space. One of the other main cemeteries in Jerusalem, the Mount of Olives, is almost full. This is the largest but it is getting full as well. For almost 20 years the answer has been constructing multi-level buildings for stack burial.”

A visualisation of how the catacombs will look.

Glazer said the idea for modern catacombs emerged from a desire to use space innovatively and reduce the environmental impact of burying the dead.

“I used to come into Jerusalem every day on Road 1 [the main road from Tel Aviv, visible from the cemetery’s slopes]. The first thing I saw coming into the city was the cemetery and it bothered me. I would come with people from abroad and they would say the stack burial buildings looked like hotels.

“I remembered I had heard about work done at the Technion university [in Haifa] years ago on the subject of religious approval for underground burial. So I started to sketch out some solutions. Then, to cut a long story short, we came to this burial society and they agreed to start a small pilot tunnel. Very quickly they decided to go ahead with the full project.”

The subterranean cemetery. Photograph: Alon/ZUMA Wire/Rex/Shutterstock

When the first phase is complete in 2018, the tunnels will provide 6,000 graves with thousands more to follow. Another burial society has already expressed interest in developing more chambers.

The idea is by no means new, which has helped it gain religious approval from figures such as Israel’s chief rabbi. “Burials like this existed in ancient times, 1,600 to 2,000 years ago,” said Glazer. “And we have revived this tradition.”

• This article was corrected on 1 and 4 December 2017. The tunnels are located under the cemetery at Givat Shaul, not Mount Herzl; and the amount of bedrock and rubble to be removed will total 300,000 cubic metres, not square metres.