Jerusalem: Israel said it had arrested two Palestinians from East Jerusalem who were planning to carry out attacks for al-Qaeda, including on the US embassy, with the help of foreign suicide bombers posing as Russian tourists.

The men were recruited by another al-Qaeda agent in the Gaza Strip, said Israel's Shin Bet intelligence agency, the second Israeli report in as many months suggesting the militant network was taking root among Palestinians.

A file photo of al-Qaeda leader Ayman al-Zawahiri. Israel said it had foiled an "advanced" al-Qaeda plan to carry out a suicide bombing on the US embassy in Tel Aviv. Credit:AP

Hamas Islamists governing Gaza rejected the spy agency's account as "silly fabrications", saying it was an attempt to justify Israeli military strikes in the Palestinian territory.

Security experts say al-Qaeda and its global agenda have had only a fringe appeal among Palestinians as they pursue a more nationalist conflict with Israel.