Israel will remove metal detectors from a holy site in Jerusalem and use less obtrusive surveillance.
Prime Minister Benjamin Netanyahu’s security cabinet voted for the move early on Tuesday.
Tensions rose after two Israeli policemen were killed on 14 July at the site known to Jews as the Temple Mount and Muslims as Haram al-Sharif.
The UN’s Middle East envoy had warned the tensions risked spreading “well beyond” the ancient city.
A statement from Mr Netanyahu’s office said the security cabinet accepted “the recommendation of all the security bodies to change the inspection with metal detectors to a security inspection based on advanced technologies and other means”.