A Palestinian woman, whose house was destroyed by what witnesses said was Israeli shelling during the 50-day war in 2014, reacts after rainwater flooded her makeshift shelter in Khan Younis in the southern Gaza Strip on Wednesday.

AFP/Jerusalem

An Arab woman stabbed a Jewish man in a new knife attack in Jerusalem's Old City on Wednesday before being shot and seriously wounded by her victim, Israeli police said.

The 35-year-old man, who was armed, was only lightly wounded and managed to draw his gun after she stabbed him in the back, police spokeswoman Luba Samri said.

The woman was taken to hospital in serious condition, she added.

The stabbing happened in the alleyways of the Old City not far from the flashpoint Al-Aqsa mosque compound which has been the focus of three weeks of deadly violence in annexed east Jerusalem and the occupied West Bank, an AFP correspondent reported.

It came just days after two Israelis were killed in a knife and gun attack in the Old City that prompted a temporary ban on Palestinians other than residents, business owners and schoolchildren entering the district.

Saturday's attack was followed by another stabbing the following day in west Jerusalem.

According to police, a 19-year-old Palestinian stabbed and wounded a 15-year-old passerby before being shot dead while fleeing, although his family have contested that account.

Israel lifts restrictions at Al-Aqsa  

Israel lifted restrictions on worship at Al-Aqsa mosque compound on Wednesday in an apparent bid, swiftly welcomed by Washington, to ease tensions after three weeks of violence.

The Israeli move came after Palestinian president Mahmud Abbas instructed security forces and political factions to prevent any escalation of the violence which has raised fears of a new intifada or uprising.

The Al-Aqsa compound has been the focus of angry protests which have raged in annexed east Jerusalem and the occupied West Bank, and which on Tuesday spread to the heart of Israel with masked Arab Israeli demonstrators hurling stones at police in the Jaffa district of Tel Aviv.

Palestinians fear that Israel's right-wing governing coalition is poised to change longstanding rules which allow Jews to visit, but not pray at, the mosque compound.

There have been repeated clashes in and around the compound in Jerusalem's Old City through a succession of Jewish religious holidays that have seen a rise in the numbers of Jewish visitors.

The disturbances prompted Israel to deny entry to Muslim men under 50 from Sunday.

But police announced late on Tuesday that the restriction would be lifted in time for Wednesday's Muslim prayers.

US State Department spokesman Mark Toner welcomed the move as "a step in the right direction" to ease tensions.