Jerusalem: Israel will permit Yasser Arafat to be buried in the Gaza strip, but not in Jerusalem, an Israeli Minister said, even as the Palestinian leader lay "gravely ill" at a Paris hospital.

"It is clear that he will not be buried in Jerusalem, and that he will not be buried on the Temple Mount," Israeli Justice Minister Yosef Lapid told Israel TV's Channel Two.

Burial in Jerusalem would be seen as strengthening Palestinian claims to the traditionally Arab sector of the city as a future capital, media reports said.

Lapid did not refer to a possible ban on a West Bank burial, but said, "Now we are talking about Gaza. We have no problems with Gaza, of course."

However, Palestinians have refused to begin planning for his funeral or coordinate with Israel on the movement of attending foreign dignitaries, officials say.

Arafat had expressed a wish to be buried at a hotly disputed holy site in the Old City of Jerusalem.

Muslims call the hilltop Haram as-Sharif, or Noble Sanctuary, Islam's third-holiest shrine, where the Al Aqsa Mosque compound is built over the ruins of the biblical Jewish temples. Jews call the site the Temple Mount, Judaism's holiest site.

Arafat could be buried in the Gaza strip, where Arafat's family owns a burial plot in Khan Yunis, where his sister is buried, officials said.

Meanwhile, Israel went on high security alert as the condition of Arafat deteriorated.