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Thousands of people are expected to participate in Jerusalem's annual Gay Pride march on Thursday under high security following a knife attack by a Jewish religious extremist that killed a teenager in 2015.

Police are expected to deploy some 2,500 undercover and uniformed officers for the parade that starts at a park in the Holy City and continues through nearby streets in the late afternoon and into the evening.

Police announced earlier in the day that two people had been arrested on suspicion of planning to disrupt the event, without providing further details.

This year marks the 18th Gay Pride march in Jerusalem, but due to the city's conservative religious character, controversy and even violence have erupted at times.

The city has hung rainbow flags along the march's route despite Jerusalem chief rabbi Avi Stern requesting it not be done to "avoid hurting the feelings of part of the population."

City hall has also ordered the removal of posters denouncing the march and reading "Father and Mother = Family. The courage to be normal".

A 2015 knife attack that killed a 16-year-old girl and wounded several others remains fresh in the minds of many.

The attacker was Yishai Shlissel, an ultra-Orthodox Jew now serving a life sentence. 

Shlissel had spent ten years in jail after a similar attack on the 2005 Jerusalem Gay Pride march and had been released just three weeks before the event, leading to heavy criticism of the police.

The Jerusalem parade has taken on added significance since then, with many from outside the gay community joining the march in solidarity and to call for tolerance.

Organisers were planning to leave flowers at the location of the stabbing. The march takes place only in mainly Jewish West Jerusalem and not in the city's annexed eastern sector, which is claimed by the Palestinians as the capital of their future state.

Israel has the most open attitude to homosexuality in the Middle East, with a large and influential gay community.

But conservative Jerusalem, which is sacred to Jews, Muslims and Christians, is far less gay-friendly than liberal Tel Aviv.

Neil Patrick Harris, a US actor famous for his role as Barney Stinson in How I Met Your Mother, is expected to attend the event in Tel Aviv after he was appointed as the international ambassador for this year's parade.

"Tel Aviv Municipality said that "hundreds of thousands of people from Israel and around the world will descend on Tel Aviv for a nonstop week of parties, events, and shows that feature and celebrate the city's vibrant LGBTQ community, culminating in a massive parade through the city streets,” authorities in Tel Aviv said in a statement.

"Tel Aviv's Pride parade is the largest Pride event in Asia and the Middle East, and one of the largest parades in the world," the municipality added.

But queer pro-Palestinian activists have regularly slammed Israel for its double standards amid a wave of human rights violations against Palestinians, including those of the LGBTQ community.

"Israel intentionally diverts attention away from its human rights abuses by shamelessly portraying the state as a progressive, gay-friendly tourist destination," London Palestine Action said in the lead up to an anti-Israel protest in November.

On Wednesday night, Prime Minister Binyamin Netanyahu announced the appointment of Israel's first openly gay minister.

But many analysts saw Amir Ohana's appointment as justice minister months ahead of 17 September elections as strictly politically motivated since he has expressed support for a proposal that would result in Netanyahu being granted immunity from prosecution.

Netanyahu faces possible indictment for corruption in the months ahead.

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