Clashes shook the Shuafat camp for a third straight day with security forces firing tear gas at crowds of youths who set light to tyres and rubbish bins.
The camp descended into chaos on Wednesday after one of its residents deliberately ran down two groups of pedestrians in Jerusalem, killing a border policeman and injuring another nine people before being shot dead.
A young Israeli also died today of injuries sustained in the attack -- the second of its kind in a fortnight.
Police said that in the event the Old City was calm and 15,000 worshippers prayed at Al-Aqsa without incident, with more than 1,300 police deployed to maintain order.
Annexed east Jerusalem has been engulfed by violence over the past four months, with clashes occurring on an almost daily basis in several flashpoint Palestinian neighbourhoods.
Community officials say the wave of unrest is fuelled by a sense of hopelessness resulting from Israel's policies in east Jerusalem, which have left many youths with a sense they have nothing to lose.
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