A new Israeli highway project is threatening to add to tensions in Jerusalem by cutting through a quiet, middle class Arab neighbourhood to link a large bloc of illegal Jewish settlements to the city.

The project comes during a flurry of Israeli building in occupied east Jerusalem, the section of the city lived in by Palestinians.

City officials say the road is meant to serve everyone.

Critics counter that the road is part of a grand scheme, including construction of thousands of apartments, to solidify Israel's control over the area and sever the connection between the holy city and any future Palestinian state.

"It changes the geography and demography in ways that will make a two-state solution very, very difficult," said Aviv Tatarsky of Ir Amim, an organisation that lobbies for equitable treatment of Jews and Arabs in Jerusalem.

The highway project is just four kilometres long and will complete a north-south route across the city.

It will link two of Israel's most contentious roads, allowing Israeli Jews living in the southern West Bank to zip into Jerusalem and to the coastal city of Tel Aviv with barely a stop.

Israeli work crews have already moved into the Arab neighbourhood of Beit Safafa in southeast Jerusalem, and begun construction on the 1.5-km section through the neighbourhood.

City officials say the extension will improve transport for Jerusalem's Arabs and Jews. They said they could not hold up infrastructure development while waiting for a resolution to the decades-old Mideast conflict.

Even if Jerusalem is divided to serve as the future capitals of Israel and Palestine, the road networks would likely be shared, said deputy mayor Naomi Tsur.

"Whatever the future status of Jerusalem, people have to have access from one end of the city to the other," Tsur said.

"They still have to get to work, clinics, schools and universities ... even if half the city is Palestine, they will have to have access."

Destruction of community

Beit Safafa residents say the project is destroying their community by separating thousands of residents from the neighbourhood's centre, where the schools and medical clinics are.

In an area where olive and almond trees still peek out among buildings, they also warn that the construction will remove what little remains of their rural past.

"Children will be cut off from school, the elderly from mosques," said resident Alaa Salman.

"When somebody dies in our village we carry them with our hands to our cemetery. How will we do that after the road is built? All that will change," he said.

Residents are meeting municipal officials, organising protests and petitioning Israel's Supreme Court to move the highway underground.

The city is planning to bury 180 metres of the Beit Safafa route and build parks on top.

The road project appears to be part of a larger Israeli plan for Jerusalem.

The final stretch of the Begin highway, named after the late Prime Minister Menachem Begin, is crucial for consolidating Israeli control.

The decades-old project will link Route 60, a thoroughfare for West Bank settlements southeast of Jerusalem, to Route 443, a highway that links Jerusalem and Tel Aviv.

Route 443 has drawn criticism because part of it runs through the West Bank.

Along with the road, several thousand new apartments are in various stages of planning in the east Jerusalem area.

Much of the new construction is slated for settlements that surround Beit Safafa.