The move came as Israeli police announced they were beefing up security patrols in Jerusalem with a thousand extra officers and special forces.
"We will not allow the reality in the city to become such that people lob stones, throw firebombs and disturb public order," Netanyahu said at the start of his weekly Cabinet meeting.
In recent weeks, Palestinian youths have clashed frequently with Israeli police, thrown stones and firebombs at Israeli motorists and disrupted service of the city's light rail train — a service meant to unify the city. A 14-year old Palestinian-American was also shot dead Friday during clashes with police near the West Bank city of Ramallah.
The municipality of Tel Aviv, Israel's commercial and cultural capital, said it honored a request by parents of 8th grade pupils to postpone a field trip planned for most Tel Aviv schools this week because it included visits to areas where violence recently occurred.
Last week a Palestinian motorist with a history of anti-Israel violence slammed his car into a crowded light rail train station, killing a 3-month-old girl who was a U.S. citizen and wounding eight people. The municipality said pupils were scheduled to visit a nearby site.
The postponement of this week's trip angered Jerusalem city officials. In a statement, the municipality said Jerusalem is "a safe and open city" and canceling trips would "reward those who are disturbing the peace."
In recent months, clashes have erupted at Jerusalem's most sensitive holy site between Palestinian stone throwers and Israeli police. Similar clashes have erupted elsewhere in east Jerusalem, the section of the holy city captured by Israel in 1967 and claimed by the Palestinians as their capital.
Tensions began rising this summer. In June, Palestinians with ties to the Hamas militant group, according to Israeli officials, kidnapped and killed three Israeli teens in the West Bank. In July, Israelis kidnapped and killed a Palestinian teen in Jerusalem in a revenge attack.
The unrest continued throughout the summer after Israel attacked Gaza in response to heavy Hamas rocket fire, sparking a 50-day war between Israel and Hamas.
The arrival of Jewish nationalists into the heart of the Arab neighborhood of Silwan, coupled with clashes at Jerusalem's most sensitive holy site, have further fueled the tensions in the city.
An Israeli court ruled that only 20 people may attend a funeral for the Palestinian motorist who was shot by Israeli police after he slammed his car into the train station last week. Police requested a small ceremony to prevent rioting, Samri said.
The motorist's family had petitioned the court to relax restrictions on funeral attendance but the court rejected the petition, Samri said.