Israel's former foreign minister has warned Israel is on the verge of a holy war with the Muslim world.

Tzipi Livni said tactical differences over security measures at a holy site in Jerusalem have deteriorated into something far worse and could result in a religious battle.

On Monday, Ms Livni told Israel's Army Radio: "We are a step away from turning our conflict with the Palestinians, and cooperation with Jordan and other Sunni nations, into a pan-Muslim event against the state of Israel."

She said the Israeli cabinet needed to show leadership to prevent such a conflict from happening.

Tzipi Livni says the Israeli cabinet needs to prevent such a conflict from happening (JACK GUEZ/AFP/Getty Images)

Israel's security cabinet decided to remove the metal detectors at entry points to the shrine, known to Muslims as the Noble Sanctuary and to Jews as the Temple Mount.

They are to be replaced by "smart cameras" to monitor worshippers, with increased Israeli security forces in the area until the plan is implemented.

But Rami Hamdallah, the Palestinian Prime Minister, and the senior Muslim cleric who oversees the holy compound both turned down the new Israeli measures and demanded all of them be removed.

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"We reject all obstacles that hinder freedom of worship and we demand the return to the situation where things stood before July 14," Mr Hamdallah told his cabinet in Ramallah in the Israeli-occupied West Bank.

The Waqf, the religious body that runs the Islamic sites in the al-Aqsa compound, said worshippers would continue to stay away from the elevated, marble-and-stone plaza and pray in the streets outside.

The Israeli–Palestinian conflict intensifies Show all 10 1 /10 The Israeli–Palestinian conflict intensifies The Israeli–Palestinian conflict intensifies Medics evacuate a wounded man from the scene of an attack in Jerusalem. A Palestinian rammed a vehicle into a bus stop then got out and started stabbing people before he was shot dead AP The Israeli–Palestinian conflict intensifies Israeli ZAKA emergency response members carry the body of an Israeli at the scene of a shooting attack in Jerusalem. A pair of Palestinian men boarded a bus in Jerusalem and began shooting and stabbing passengers, while another assailant rammed a car into a bus station before stabbing bystanders, in near-simultaneous attacks that escalated a month long wave of violence AP The Israeli–Palestinian conflict intensifies Youths attend the funeral of Ahmad Sharake who was shot during clashes with Israeli forces in Jelazun refugee camp, near Ramallah, West Bank. Tensions in the area continue to run high following a series of stabbing attacks that have occurred around Israel in clashes between Palestinian youths and Israeli security forces Getty Images The Israeli–Palestinian conflict intensifies Palestinians throw molotov cocktail during clashes with Israeli troops near Ramallah, West Bank. Recent days have seen a series of stabbing attacks in Israel and the West Bank that have wounded several Israelis AP The Israeli–Palestinian conflict intensifies Women cry during the funeral of Palestinian teenager Ahmad Sharaka, 13, who was shot dead by Israeli forces during clashes at a checkpoint near Ramallah, at the family house in the Palestinian West Bank refugee camp of Jalazoun, Ramallah AP The Israeli–Palestinian conflict intensifies A wounded Palestinian boy and his father hold hands at a hospital after their house was brought down by an Israeli air strike in Gaza Reuters The Israeli–Palestinian conflict intensifies Palestinians look on after a protester is shot by Israelis soldiers during clashes at the Howara checkpoint near the West Bank city of Nablus EPA The Israeli–Palestinian conflict intensifies A lawyer wearing his official robes kicks a tear gas canister back toward Israeli soldiers during a demonstration by scores of Palestinian lawyers called for by the Palestinian Bar Association in solidarity with protesters at the Al-Aqsa mosque compound in Jerusalem's Old City, near Ramallah, West Bank AP The Israeli–Palestinian conflict intensifies Undercover Israeli soldiers detain a Palestinian in Ramallah Reuters The Israeli–Palestinian conflict intensifies Palestinian youth burn tyres during clashes with Israeli soldiers close to the Jewish settlement of Bet El, in the West Bank city of Ramallah, after Israel barred Palestinians from Jerusalem's Old City as tensions mounted following attacks that killed two Israelis and wounded a child

The installation of the metal detectors set off widespread protests and deadly Israeli-Palestinian violence over the past week. Large crowds of Muslim worshippers prayed outside the shrine in protest every day, refusing to pass through the metal detectors.

At least four Palestinians were killed in street clashes, while three Israeli settlers were stabbed to death in their West Bank home.

On Sunday, two Jordanians were killed by an Israeli guard after one attacked him with a screwdriver at the Israeli embassy in Jordan.

While the metal detectors are being dismantled, Turkish President Recep Tayyip Erdogan has urged Muslims across the world to "visit" and "protect" Jerusalem.

"From here I make a call to all Muslims. Anyone who has the opportunity should visit Jerusalem, Al-Aqsa mosque,” Mr Erdogan said in Ankara.

“Come, let’s all protect Jerusalem," he added.