"Israel is committed to maintaining the status quo exactly as it's been for many decades. What we're seeing is Palestinian extremists who are instigating violence through incitement," he said in the presence of UN Secretary General Ban Ki-moon.
Earlier in the day Ban said he was "deeply concerned by repeated provocations at the holy sites in Jerusalem," which "inflame tensions and must stop."
The UN chief's remarks came hours after clashes at the Al-Aqsa mosque compound between Israeli police and Palestinian protesters demonstrating against Orthodox Jews going to the esplanade, which is holy to both Islam and Judaism.
"A real peace can only be achieved through bilateral negotiations," Netanyahu told Ban ahead of a meeting with him.
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"I believe that unilateral steps by Palestinians at the United Nations will not advance peace," he said. "If the UN wants to support a genuine reconciliation, it must avoid any steps that could undermine peace."
Ban took Netanyahu to task for Israel's own unilateral settlement construction announcements, saying they were "in clear violation of international law" and do "not send the right signals".
"I urge the government of Israel to reverse these activities," he said.
"Unilateral action is no foundation for the future," Ban said. "The two-state solution is the only way to bring peace to both sides.