The Israeli security authorities ended the siege of "Al-Haram Al-Sharif," at dawn, after Muslim worshippers refused to get out of the mosque, Palestinian sources said.
The Israelis threatened to resume blocking the gates and the walls of Al-Aqsa Mosque at a later time, the sources said.
Around 200 Palestinian worshippers have remained in the mosque since Saturday to prevent radical Jews from storming Al-Haram Al-Sharif on the occasion of a Jewish religious day, the sources added.
Meanwhile, clashes erupted earlier today between the Israeli security personnel and the Palestinian students where the forces used tear gas to disperse them, the sources added.
The Palestinians warned blood would be spilled in case Al-Aqsa Mosque was raided.
Haaretz, an Israeli daily, said 2,000 policemen were expected to be deployed in Jerusalem to protect Jewish settlers as they planned a demonstration in the old city. The Jewish activists would march through mainly Arab suburbs.
The Israeli police said the demonstration would be staged and denied any change of its location.
Meanwhile, the Israeli Deputy Prime Minister Silvan Shalom called for outlawing the Islamic Movement in the territories of 1948 and to arrest head of the northern branch of the Islamic Movement Sheikh Ra'ad Salah and his deputy Sheikh kamal Al-Khateeb.
Shalom told Radio Israel the Islamic Movement is instigating the Arabs to control Jerusalem.