The move will affect Palestinians in annexed east Jerusalem who do not live inside the Old City, with only Israelis, tourists, residents of the area, business owners and schoolchildren able to enter, they said.
Worship at the sensitive Al-Aqsa mosque compound will be limited to men aged 50 and above, while there will be no age restrictions on women. They will be allowed to enter through one specific gate.
Last night, a Palestinian said to be an Islamist militant killed two Israeli men and wounded a woman and a toddler in a knife and gun attack in the Old City. Police shot dead the attacker.
The attacks came with Israeli security forces on alert after recent clashes at the Al-Aqsa mosque compound and in the surrounding Old City, as well as the murder in the West Bank of a Jewish settler couple in front of their young children.
Recent Jewish and Muslim holidays have added to tensions, particularly with Jews visiting the Al-Aqsa compound, which they revere as the Temple Mount.
The eight-day Jewish Sukkot holiday began last Sunday and has continued all week.
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