Israel ordered the closure of an office in Arab East Jerusalem on Tuesday saying it was funded by the Palestinian Authority and involved with monitoring the sale of Palestinian property to Jews, police said.
Israel forbids any official activity by the Western-backed Palestinian Authority in Jerusalem, saying it breaches Israel's sovereignty over the city, which it has declared its indivisible capital, although this is not recognized internationally.
But a Palestinian official said that the map office run by Khalil Tafakji, who was detained briefly by Israeli police, was not funded by the Palestinian Authority and was not in breach of any agreements.
Although Israel forbids the Palestinian Authority from operating in Jerusalem, in the 1990s, after the Oslo interim peace accords were signed, then-Israeli foreign minister Shimon Peres promised the Palestinians in a letter not to harm their institutions in the city.
Israel's internal security minister said the office, which drafts maps, was "monitoring and documenting" Palestinian-owned land in East Jerusalem, scrutinizing changes Israel has made to the terrain and passing on the names of landowners planning to sell.
"Internal Security Minister Gilad Erdan ordered the closure of the Palestinian map office which has resumed operations in Beit Hanina in Jerusalem," a police statement said.
Palestinian chief negotiator Saeb Erekat called the closure a "provocative act" and part of an effort by Israel "to erase any Palestinian presence in the city".
However, in a statement Erdan said: "The Palestinian map office is part of the PA's plan to harm our sovereignty in Jerusalem and to threaten Arabs selling real estate to Jews in the city.
I will continue to act firmly to prevent any Palestinian government foothold in Jerusalem."
Police seized documents and computers from Tafakji's office, in Beit Hanina, a Palestinian neighborhood in the northern part of Jerusalem.
A family member said he was released hours after being detained.
The Palestinians want East Jerusalem as the capital of their future state, together with the occupied West Bank and Gaza.
Israel occupied East Jerusalem after capturing it in a 1967 war, a move not recognized internationally.
Since annexing East Jerusalem in 1980, Israel has greatly expanded its presence in that part of the city, building settlements and major pieces of infrastructure.
Private Jewish groups have also sought to buy up Palestinian homes in eastern neighborhoods to expand the Jewish presence in the east.