Israeli prosecutors charged two Arab citizens on Thursday with plotting to carry out a shooting in the streets of Jerusalem's Old City out of loyalty to the militant Islamic State (IS) group.

Prosecutors alleged that the pair, who were arrested on September 6, had tried unsuccessfully to travel to Syria to fight with IS and then decided to target fellow Israelis instead, inspired by a deadly gun and knife attack in July.

Said Jabarin, 26, from the mainly Arab northern town of Umm al-Fahm, was charged with attempting to aid an enemy, possession of firearms and using a weapon for terror.

A 16-year-old from the same town, who cannot be named because he is a minor, was charged with attempting to aid an enemy and contact with a foreign agent.

Prosecutors said that Jabarin had been questioned by Israel's Shin Bet internal security agency in January over his suspected support for IS and then given a formal warning in May.

They alleged that in the following weeks Jabarin had got to know the minor, who had unsuccessfully attempted to organise their travel to Syria through an IS intermediary they identified as Abu Alhassan.

When that fell through, they decided to carry out an attack against fellow Israelis near the flashpoint Al-Aqsa mosque compound in annexed east Jerusalem using two pistols in Jabarin's possession, prosecutors alleged. They were inspired by a July 14 attack by three Arab Israelis armed with automatic rifles and a knife who killed two police officers stationed near the compound, revered by Jews as the Temple Mount.

The Shin Bet issued a statement expressing concern at the “severe security threat” posed by Israeli Arabs who support IS and are in contact with it.

“The two support the murderous ideology of the IS terror group, and their attack was supposed to take place based on that support,” the agency alleged.

It said it estimated that around 50 Israeli Arabs had travelled to Iraq or Syria to fight with IS.

A third Umm al-Fahm resident, Firas Mahajna, 24, was also arrested on suspicion of possession of firearms and support for IS, the Shin Bet said. He will be charged in court on Sunday.