(Adds Israeli police turn away Muslim religious leader, Saudi reaction) By Jeffrey Heller JERUSALEM, Feb 8 (Reuters) - Israeli Prime Minister Ehud Olmert has spurned a call by his defence minister to consider halting excavations near Jerusalem's most sacred Islamic shrine that have angered Muslims, an official said on Thursday. The dig, outside a compound housing the Dome of the Rock and al-Aqsa mosque, has exposed the depth of Arab suspicions over Israeli activities in Arab East Jerusalem and the simmering tensions between Olmert and Defence Minister Amir Peretz. Arab states have asked Israel to halt the work at Islam's third holiest shrine, charging it could damage the mosque's foundations. Palestinian militants have threatened to end a three-month old Gaza truce with Israel. Israel said the holy places would not be harmed by what it called an attempt, mandated by law, to salvage artefacts before construction of a pedestrian bridge leading to the complex known to Muslims as al-Haram al-Sharif and to Jews as Temple Mount. An Israeli official, confirming a report in the Haaretz newspaper, said Peretz, leader of Olmert's main coalition partner, the centre-left Labour Party, had sent a written appeal to the prime minister asking for the project to be reassessed. "Our problem with the work at the Temple Mount ... is its effect on our relations with important, moderate elements in the Arab world who are very angered by it," Labour's Deputy Defence Minister Ephraim Sneh told Israel Radio. Israeli officials called the project essential as an existing ramp leading up to the complex was considered unsafe after it was damaged by a snowstorm and an earthquake in 2004. Olmert's office said the excavations, some 50 metres (yards) from the base of the compound, would go on. "A thorough examination of the matter would reveal that nothing about the work underway will harm anyone, and there is no truth in the contentions against the work," it said, in a snub to Peretz. Israeli media have been rife with reports that Olmert wants to replace the former trade union chief, who has little military experience, and appoint former Prime Minister Ehud Barak as defence minister. Peretz and Barak, Israel's most decorated soldier, will do battle in a Labour Party leadership vote in May. Saudi Arabia, the birthplace of Islam, on Thursday condemned the Israeli excavations as a provocation and appealed for international intervention to stop them. "The kingdom expresses its condemnation of these aggressive Israeli actions," state-run Saudi Press Agency quoted an official as saying. GAZA ROCKETS Citing the Jerusalem excavations, the militant group Islamic Jihad, which had not signed on to the November ceasefire, said it fired rockets from Gaza at Israel. The attack caused no serious damage. In a series of skirmishes with Palestinians, police have arrested some 30 people in Jerusalem since the work began on Tuesday and many are still detained, a police spokesman said. "There is no doubt that tomorrow will be the test," Jerusalem police chief Ilan Franco told Army Radio, referring to Muslim prayers on Friday. Israeli police, out in force, blocked the Mufti, the most senior Islamic cleric in Jerusalem, and officials of the Islamic religious trust from approaching the compound. The shrine has been a flashpoint of violence in the past. A Palestinian uprising began in 2000 after then-opposition leader Ariel Sharon toured the hilltop area. Israel's opening of an entrance to an archaeological tunnel near al-Haram al-Sharif in 1996 triggered Palestinian protests and led to clashes in which 61 Arabs and 15 Israeli soldiers died. The compound, where two biblical temples once stood and Muslims believe Mohammad ascended to heaven, is in Arab East Jerusalem, which Israel captured in the 1967 Middle East war and annexed in a step that has not won international recognition. Palestinians want the eastern part of the city as the capital of a future state.
