The security cabinet decided several measures "notably authorizing police to seal off or impose a curfew on parts of Jerusalem (holy Quds) in case of friction or incitement to violence," the security cabinet said in a statement released early on Wednesday morning.
Other measures include deploying Israeli security forces throughout Jerusalem's public transport network, using military units to reinforce Israeli police force and "demolishing terrorists' homes" and revoking their permanent residency, Al Jazeera reported.
Violent clashes have increased in frequency since Israeli security forces began to crack down on Palestinian worshippers at the al-Aqsa Mosque compound in occupied East Jerusalem (East al-Quds) last month.
The security cabinet's new measures came after another day of violence on Tuesday.
A Palestinian was killed in clashes with Israeli security forces in the West Bank city of Bethlehem, the latest such incident in nearly two weeks of violence.
Tuesday's death of Moataz Zawahra, 28, from a Bethlehem refugee camp, takes to 30 the number of Palestinians killed, Palestinian sources said.
Earlier on Tuesday, three Israelis were killed in two attacks in Jerusalem, increasing the number of Israelis killed since the upsurge in violence that began at the start of the month, to seven.
The spell of violence has been stirred by Palestinian anger over increasing Jewish visits to al-Aqsa.
The unrest began last month with clashes at Jerusalem's most sensitive holy site and quickly spread across Israel and into the West Bank and Gaza Strip.