The new security measures at the contentious holy site in Jerusalem – known as the Temple Mount by Jews and the Noble Sanctuary by Muslims – sparked violence that left three people dead on Friday.
The violence, which followed mass protests at noon prayers, saw Israeli security forces clash with Palestinians in Jerusalem and the West Bank.
Mahmoud Abbas announced the move at a meeting with senior Palestinian officials on Friday evening.
Shortly afterwards, it emerged that three Israelis had been stabbed to death at a settlement in the West Bank.
The two women and a man were killed after a Palestinian entered their house in the Halamish settlement, Israel’s Ybet reported.
The attacker had posted on Facebook that he was upset by events in Jerusalem, according to Israel’s Channel 10.
Eli Bin, the head of Israel’s rescue service MDA, said an off-duty soldier next door heard screams, rushed to the home and shot the attacker through a window. He said the attacker was wounded and taken to hospital.
The extra security measures, which also include a ban on Muslim men under 50 accessing the complex, were put in place after three Arab Israelis attacked a patrol near Lion’s Gate a week ago, killing two policemen.
The three attackers, from the city of Umm al Fahm, were all killed by Israeli security forces.
Religious clerics from the Waqf – the Jordanian trust which manages the site – had asked every mosque in the city to close on Friday and worshippers were urged to pray outside the gates of al Aqsa rather than submit to the security procedures.
The Red Crescent said 390 Palestinians were hurt in the clashes in Jerusalem, most suffering tear gas inhalation, but others injure by live fire and rubber bullets in Jerusalem. In the West Bank another 66 were taken to hospital.
Israeli police said five officers were wounded.
Access to the compound was already difficult – or impossible – for many Palestinians.
Under the status quo – which dates back to the Ottoman period – only Muslims have the right to worship on the plaza, although Jews and people from other faiths can visit.
Different residency rights have been introduced by Israel since it captured the West Bank, Gaza and East Jerusalem in the 1967 Six-Day War.
Since Israel captured the Old City it has remained committed to that formula.
However, Palestinians claim the extra security measures represent a change and a further erosion of their rights to access to the holy site.