Israeli far-right nationalists began a flag-waving march through occupied East Jerusalem Tuesday that risks reigniting tensions with Palestinians and poses an early challenge for Israel's new government.

On Tuesday, Israeli police in riot gear and on horseback cordoned off areas leading to the walled Old City's flashpoint Damascus Gate, clearing the area of Palestinians ahead of a congregation of right-wing demonstrators in the neighbourhood.

Police were expected to prevent marchers from going through the Damascus Gate, the main entry to the Muslim Quarter of the Old City, which is also home to shrines sacred to Judaism, Islam and Christianity and is the most sensitive site in the more than 70-year-old Israeli-Palestinian conflict.

"Jerusalem is for all religions, but Jerusalem is in Israel. And in Israel, we must be able to go wherever we want, with our flag," said marcher Doron Avrahami, 50, channelling right-wing frustrations with police restrictions.

Assailing the march as a "provocation", Palestinians called for "Day of Rage" protests in Gaza and the Israeli-occupied West Bank with memories still fresh of confrontations between Israeli police and Palestinians during the Muslim holy month of Ramadan.

"We warn of the dangerous repercussions that may result from the occupying power's intention to allow extremist Israeli settlers to carry out the Flag March in occupied Jerusalem," Palestinian Prime Minister Mohammad Shtayyeh said.

Thousands of Palestinians gathered in areas near the Damascus Gate and at least five were injured in clashes with Israeli police firing stun grenades, the Palestine Red Crescent ambulance service said.

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