Israel's president, Shimon Peres, has called on the country's football authorities to clamp down on racism after Beitar Jerusalem fans protested against the club's intention to sign two Muslim players.

Fans of the club, which has never hired an Israeli-Arab or Muslim player, raised a banner at a match at the city's Teddy stadium on Saturday reading "Beitar pure forever".

Peres wrote to the Israel Football Association on Tuesday: "Racism has struck the Jewish people harder than any other nation in the world … the entire country is shocked by this phenomenon and will never agree to come to terms with it." He called for the chairman to take a "determined stance" on racism in football.

The club's owner, Arcadi Gaydamak, said he would sign the two players from Terek Grozny, a Chechnyan Russian premier league team, despite the protest. Other Israeli clubs have, or have had, Arab and Muslim players.

Beitar fans are renowned for racist activity. In March hundreds went on a rampage at a shopping centre after a match and abused and assaulted Palestinian staff and customers. Police made no arrests.

One fan, a member of the notorious La Familia, told the Israeli daily newspaper Yedioth Ahronoth: "I'm a racist. I hate Arabs, and we made the banner so that people would realise that they can't bring Arab players to Beitar. If they bring in Muslims, the fans will burn down the club. That can't happen. Arabs and Beitar Jerusalem don't mix."

The former prime minister Ehud Olmert, a Beitar fan for more than 40 years, said he would no longer attend matches because of fans' behaviour. "Ultimately, this is a matter that concerns all of us. Either we remove this group of racists from our field and cut it off from the team, or we are all like them. Until that happens, I will not go to games," he wrote in Yedioth Ahronoth.

Beitar is scheduled to play Maccabi Umm al-Fahm, a team from an Israeli-Arab town in northern Israel, in Jerusalem on Tuesday evening. Hundreds of extra police will be on duty during the game amid fears of racist violence.