UN chief Ban Ki-moon warned of a "dangerous escalation" and urged Israelis and Palestinians to move quickly to calm nearly three weeks of unrest during a visit to Jerusalem on Tuesday.
"My visit reflects the sense of global alarm at the dangerous escalation in violence between Israelis and Palestinians," he told journalists after meeting Israeli President Reuven Rivlin.
"If we do not act fast, the dynamics on the ground will only get worse."
Ban is due to meet Israeli Prime Minister Binyamin Netanyahu later Tuesday and Palestinian Authority president Mahmud Abbas on Wednesday morning.
A wave of Palestinian knife, gun and car attacks against Israelis has raised fears of a full-scale Arab terrorist campaign.
"It is not too late to avoid a broader crisis," Ban said, urging renewed peace efforts, with negotiations at a standstill for more than a year.
"In my meetings today and tomorrow, with the Israeli and Palestinian leadership, I will be appealing to all to make concerted efforts to limit new incidents on both sides… We must not allow extremists on either side, or those who believe violence is the answer, to further fuel the conflict."
He said that "beyond the immediate tensions, what is missing is the resolve to restore a political horizon for talks, and a political process that delivers real results and peace."
"We must, for the future of our children, come back from this dangerous abyss, safeguard the two-state solution, and lead people back to the road toward peace."
President Rivlin, for his part, blamed Muslim extremists – who have been spreading false rumors of Israeli plans to change the "status-quo" on the Temple Mount – for driving the conflict.
"The Temple Mount is being held hostage by people who want to bring about a religious war. We cannot allow this. Israel has no war with Islam," Rivlin said.
With regard to the arrangements on the Temple Mount, President Rivlin stressed that IIsrael has not, and will not, change one letter of the status quo agreement. The agreement was not meant to divide the different faiths, but to build understanding. Israel will continue to respect the rights of the Muslim worshippers, and the holiness of the site.
"The United Nations and all its institutions have a responsibility to work against any escalation of the conflict. UNESCO must reject any attempt to deny the Jewish connection to the Temple Mount."
But Rivlin warned world leaders against rewarding the terrorists by responding to their violence with calls for more Israeli concessions.
"It is important that every step taken will not be seen as giving a prize to terrorism, by making this an international conflict. It is up to the parties of the region, to find the way to bring an end to this tragedy.
"All my life, I have believed, and worked for the sake, of coexistence between Arabs and Jews. I believe that Jerusalem is a microcosm of our ability to live together – Jews, Muslims, Christians – in Israel and across the region. What we will be able to build here can stand as an example to the whole world."
The unrest has drawn mounting international concern, with US Secretary of State John Kerry due to meet Netanyahu in Germany this week and Abbas later at an unspecified location in the Middle East.
AFP contributed to this report.