In October, US Secretary of State John Kerry endorsed a plan to install cameras at the site in a bid to calm repeated disturbances, after talks with Jordan's King Hussein and Palestinian leader Mahmud Abbas. Israeli Prime Minister Benjamin Netanyahu agreed.
But the Jordanian-run trust or "Waqf" that administers the site - which houses the famed golden Dome of the Rock and Al-Aqsa mosque - then complained that Israeli police had blocked them from installing the cameras.
The footage will be broadcast online to "document all Israeli violations and aggressions", he said in a statement, adding that no cameras would be installed inside mosques.
Clashes between Palestinian youths and Israeli security forces erupted at the compound in September amid fears among Muslims that Israel was planning to change rules governing the site in annexed east Jerusalem.
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The Israeli prime minister has said repeatedly there are no such plans.
The Al-Aqsa clashes preceded a wave of violence that has killed 198 Palestinians, 28 Israelis, two Americans, an Eritrean and a Sudanese since October 1, according to an AFP count.
It is also revered by Jews as the site of their First and Second Temples and is Judaism's holy site.
Under longstanding rules, Jews are allowed to visit, but not pray in, the compound.