Israeli police on Wednesday said they had arrested an Israeli suspected of having desecrated a Muslim cemetery in annexed east Jerusalems Old City by hanging a donkeys head.

Describing the 35-year-old as unbalanced, police said he was arrested after they were alerted that a man had broken the law and disrupted public order by hanging the head of a donkey at the cemetery.

Photographs circulating on social media showed the head of a donkey hanging from a fence of the cemetery, which is adjacent to the Golden Gate, the oldest in the Old City and the only one to be walled.

According to Jewish tradition the Golden Gate will only open on arrival of the messiah, who will enter Jerusalem through it.

Police said the man was carrying an axe at the time of his arrest, adding that another suspect who allegedly had helped in taking him there was also in custody.

A Jewish extremist slit the throat of a donkey today at the Golden Gate cemetery before hanging it over the Muslim graves there, the Waqf Islamic affairs council said in a statement.

It was a serious desecration of one of the main historic Muslim cemeteries in Jerusalem.

The cemetery is near the Al-Aqsa mosque compound, a site holy to both Muslims and Jews and is at the heart of tensions between Palestinians and Israelis.

The compound, also home to the Dome of the Rock, is Islams holiest site after Mecca and Medina in Saudi Arabia. It lies directly above the Western Wall, the holiest place where Jews are allowed to pray.

In recent years nationalist Jews have made multiple visits to the compound, sparking anger among Palestinians who see this as a provocation.

Defending Al-Aqsa was cited by the Palestinian militant group Hamas as the main reason for its deadly attack on Israel on October 7 which triggered full-blown war with Israel. (AFP)