Bulldozers on Tuesday tore down a mosque being built without authorization next to the Basilica of the Annunciation, where Christians believe the Angel Gabriel foretold the birth of Jesus.
The mosque construction had raised tensions between Christians and Muslims in Nazareth, Israel's largest Arab city, and brought criticism from the White House and the Vatican. Its demolition on Tuesday provoked an outcry from Israel's Muslim Arab leaders but was welcomed by the Vatican.
A wrecking squad from Israel's Interior Ministry arrived at dawn and demolished the partially built mosque while most of the city's Muslims slept.
Hundreds of riot police guarded the workers and as protesters began arriving at the site, a few scuffles broke out and two policemen were slightly injured. Police arrested seven people, including Deputy Mayor Salman Abu Ahmed, a leader of the Islamic Movement, the largest political group among Israeli Arabs.
Tempers later cooled, and about 200 Muslim worshippers gathered peacefully for midday prayers in a nearby road, which police had closed to traffic.
In Rome, the Vatican welcomed the demolition. The Rev. Giovanni Battistelli, the Franciscan's top representative in the Holy Land, called the decision to remove the mosque "fair and just."
Battistelli told Vatican Radio, "We had been asking for it since the beginning."
An Israeli court issued a demolition order in March for the Shihab al-Din Mosque, which did not have a building permit despite informal government assent.
The issue has been a source of friction for years between Muslim and Christian leaders and Israeli authorities. Pope John Paul II threatened to cancel a visit in 2000 over the issue, and President Bush raised the subject with Israeli Prime Minister Ariel Sharon during a meeting the following year.
Christian leaders argued building a mosque so close to the basilica was disrespectful. Muslims said they cherished the site because a Muslim religious leader is buried there.
A government committee set up to resolve the issue decided to renovate his tomb and incorporate it into a public square which would also serve Christian pilgrims visiting the church. Work on the square started immediately after three massive bulldozers cleared the site.
The demolition added to tensions mounting over a decision to start allowing small groups of non-Muslims to visit a Jerusalem shrine after barring them during the past 33 months of Israeli-Palestinian fighting.
The Jerusalem shrine is called Haram as-Sharif, or Noble Sanctuary, by Muslims, who venerate it as their third-holiest place after Mecca and Medina. Jews refer to it as the Temple Mount, site of the biblical Jewish temples and their holiest site.
Police spokesman Gil Kleiman said in recent weeks organized groups of Israelis and tourists of various religions have been allowed to tour the ancient hilltop under police escort. Kleiman said the mount home to Islam's Al Aqsa Mosque compound is still off limits to the general public.
However, Palestinian leader Yasser Arafat maintained Jewish fanatics were being let in by police under the guise of being tourists, and their "main aim is to harm the Haram as-Sharif."
Kamal Khatib, a leader of the Islamic Movement, contended the moves in Nazareth and Jerusalem were part of a broader government campaign against Muslims.
"Now it's the demolition of the Shihab al-Din mosque and they're starting tours inside Al Aqsa mosque, then maybe they (Jews) will pray there and after that, maybe they'll demolish Al Aqsa," Khatib told Israel Radio.
The Islamic Trust, the body responsible for the Al Aqsa complex, asked police to stop the visits.
Israeli lawmaker Avraham Burg, a leading dove in the opposition Labor Party, warned of a possible backlash. "Why do we have to be stupid and give someone an excuse," he told the radio. "Especially at a period likes this, which is so sensitive."
In September 2000, Prime Minister Ariel Sharon, then Israel's opposition leader, visited the hilltop to underscore Israel's claim to sovereignty there.
A day after the visit, riots erupted between police and Muslim worshippers, and six Palestinians were killed. The confrontation triggered more protests that escalated into an armed Palestinian uprising against Israeli occupation in the West Bank and Gaza Strip. Since then, more than 2,400 people have been killed on the Palestinian side, and more than 800 people on the Israeli side.