JERUSALEM - A senior Palestinian official on Tuesday accused Israel of deliberately creating an extremely dangerous situation in East Jerusalem, to trigger violence, justify a crackdown and tighten its grip on the disputed city.

Israel is lighting matches in the hope of sparking a fire, deliberately escalating tensions in occupied East Jerusalem rather than taking steps to placate the situation, chief peace negotiator Saeb Erekat said in a statement before meetings later this week with U.S. President Barack Obama's envoy.

Palestinian leaders have issued a series of dire warnings in the past week after clashes at al-Aqsa mosque in Jerusalem's Old City between Israeli police and protesters, over alleged attempts by Jewish religious activists to enter the site.

The compound housing the mosque is a holy place for both Muslims and Jews, and has often been a flashpoint of tension. Israel security forces control access to the area and regularly use their power to keep young Muslim men out.

The Israeli government has said little about the incidents. Police have issued statements detailing violence, actions taken, injuries and arrests -- which have been limited by local standards. Much of the Israeli government was on holiday this week for a religious festival.

Palestinian sources say they fear that small brushfires may quickly spiral out of control as they have done in the past, if the Israelis maintain a heavy-handed response instead of making an effort to de-escalate tensions.

The Western-backed Palestinian government on Monday said it would confront Israel diplomatically over the rise in tension, after another day of clashes between groups of stone-throwing youths and police firing tear-gas and plastic bullets.

A statement said the government of President Mahmoud Abbas would use all legal means to protect our people and to confront Israel and its plan to thwart any efforts to establish an independent Palestinian state on the territories occupied in 1967 with East Jerusalem as its capital.

Erekat said the current situation was all the more dangerous because of the vacuum created by the absence of a credible peace process that offers hope.

Obama's peace envoy George Mitchell is due back in Jerusalem this week to continue efforts to revive stalled peace talks between Abbas and Israeli Prime Minister Benjamin Netanyahu.

Palestinians believe they were the losers last month when Obama brought together Netanyahu and Abbas for a meeting on the fringes of the annual U.N. General Assembly, and appeared to soften his demand for a total halt to Israeli settlement building on occupied West Bank land and in East Jerusalem.

(Writing by Douglas Hamilton; editing by Alastair Macdonald and Mark Trevelyan)

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