"Access to the Temple Mount in Jerusalem is now free for both Muslim worshippers and tourists," Micky Rosenfeld, an Israeli police spokesman, said, using the Jewish name for the site.
It had been closed to Muslim men under the age of 50 and all non-Muslims.
State of alert
Despite the apparent relaxation of controls, Rosenfeld said about 3,000 police remained stationed across East Jerusalem and nearby villages to keep up the state of alert, the AFP news agency reported.
Al Jazeera's correspondent in the West Bank reported clashes in Qalandia on Wednesday, where she said Israeli soldiers have been firing tear gas at Palestinian protesters.
"There is an increased presence of Israeli soldiers at the Qalandia checkpoint," Nour Odeh said.
"We haven't had any confirmation if there have been any injuries but the clashes have taken on more force in nature than in the last 24 hours.
"These clashes are going further into the refugee camps ... rather than remaining at the checkpoint - an indication of the level of anger on the streets."
Palestinian groups had called for a "day of rage" on Tuesday to protest against the reopening of the Hurva synagogue, considered by some to be one of Judaism's most sacred sites.
The synagogue is located in the Jewish quarter of Jerusalem's Old City.
The walled Old City was annexed by Israel after the 1967 Middle East war, but is viewed by the Palestinians as a key part of any future independent state.
An Israeli government decision to include two West Bank religious sites in a Jewish national heritage plan had already raised tensions and the announcement of Israeli plans for new settler homesnear East Jerusalem further contributed to the volatile situation.
"This anger on the Palestinian street is all about control," Al Jazeera's Sherine Tadros, reporting from East Jerusalem, said.
"They feel increasing frustration at the fact that Israel can ease, and lift, and put on more restrictions as they please, which is a hallmark of this occupation.
"So, whether we're talking about restrictions on their holy sites, restrictions on where they can move, its all part of the same thing - frustration over Israel's control over the Palestinian people and their territory."
The unrest comes before a meeting of the Middle East diplomatic Quartet, which includes the US, Russia, the EU and the UN, in Moscow on Thursday.
The lead-up to the meeting has been overshadowed by tensions between the US and Israel over the East Jerusalem settlement announcement, made during a visit by Joe Biden, the US vice-president.
Ahmad Yousuf, a senior Hamas official and former adviser to Ismail Haniya, the deposed Palestinian prime minister, called on Tuesday for a non-violent intifada, or uprising, to protest what he called "Israeli provocations".
"We are not talking about violence. We are talking about people's right to defend themselves," he told Al Jazeera.
"When the Israelis are committing all these crimes against Muslim's holy shrines, the people [are] called to go defend themselves, to defend their holy shrines.
"This can escalate, there will be more bloody clashes if the world community doesn't do anything to stop this craziness."
Khaled Meshaal, Hamas' political chief who is exiled in Syria, has also urged Palestinians to protest, though he stopped short of calling for an intifada in remarks on the demonstrations.
He said Palestinians in Jerusalem should "take serious measures to protect al-Aqsa mosque from destruction and Judaisation".