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More than 230,000 Palestinians living in East Jerusalem face the risk of having their residency rights revoked if an Israeli government proposal goes ahead.

The plan, discussed by the Israeli government during a November meeting, comes amid heightened tensions in the region, where two months of violence has killed over 100 Palestinians.

The move means hundreds of thousands will no longer be able to enter Israel for work, education, nor be able to retain their Israeli medical insurance and social security benefits.

Around 350,000 Palestinians in East Jerusalem have identity cards giving them the right to work and move freely across the city.

The proposal will not only target those living outside the Israeli-built separation wall, but also many located inside the wall.

There are 145,000 Palestinian Jerusalemites living outside the separation wall, while 195,000 live inside of it, according to official Palestinian statistics.

Kahil Tufakji, a Palestinian settlement affairs expert, told Anadolu Agency that Israel is seeking to change the demographic equation in East Jerusalem in the favour of Jews.

"According to the plan prepared by former Israeli Prime Minister Ehud Olmert, Jerusalem will be a Jewish-majority city of 88 percent and an Arab-minority of 12 percent by 2020," Tufakji said.