Three knives and a farewell note found in the coat of one of the young would-be killers, after alert police noted them acting suspiciously.

Two 12-year-old Arab youths were arrested by alert police and Border Police forces in Jerusalem's Old City Thursday afternoon, after drawing officers' suspicions.

Upon inspection, police found two knives and a meat cleaver concealed in the coat of one of the young suspects, along with a farewell note to his parents.

An initial investigation revealed the pair were planning to carry out an imminent stabbing attack on Jewish passersby.

Both would-be terrorists were taken for further questioning by Jerusalem Police.