Violence continued on Saturday as Palestinian teenagers set large rubbish containers on fire in the streets of East Jerusalem just outside the Old City and threw rocks at police gathered nearby.
Some of the rocks smashed the windows of cars parked on the side of the road and an Israeli flag was set on fire.
Police, some on horseback and others in riot gear, responded by firing tear gas to disperse the protesters.
Angry Palestinians also pelted a bus carrying Canadians on a tour of the Mount of Olives holy site in East Jerusalem.
Dave Wood, a tourist, said: "We were just driving and all of a sudden a bunch of kids started picking up rocks and whatever they could get their hands on and started throwing it at the bus.
"This is our first day in the holy city and it was quite disturbing to say the least."
Shmuel Ben Ruby, a Jerusalem police spokesman, said a police station in East Jerusalem was also stoned on Saturday but no one was injured.
Ben Ruby said: "We expect during today there will be some more [protests]."
Police have kept a large force in the city and maintained restrictions at the holy site, barring all Muslim men under the age of 45 from praying there.
Muslim leaders in Jerusalem have promised to continue their protests against the work at the compound.
Sheikh Raed Salah, head of Israel's Islamic Movement, said: "We have a full programme of protests for the coming weeks in order to stop the Israeli crimes against the al-Aqsa mosque.
"Continuing the work will increase the tension and anger among Palestinians and in the Arab-Islamic world."
Protests against the construction have spread throughout the Muslim world, where demonstrators accused Israel of plotting to harm Islamic shrines.
In Amman, Jordan's capital, hundreds of people demonstrated outside UN offices on Friday demanding the organisation's intervention to protect the site.
Party and trade unions figures demanded the expulsion of the Israeli ambassador.