The Housing and Construction Ministry has drawn up plans for a small Jewish neighborhood - consisting of 30 apartments and a synagogue - inside Herod's Gate in the walled Old City of Jerusalem. The area immediately adjacent to the planned new neighborhood, a site known as Bab Hutta, in the northeastern corner of the Old City, has been the home for a handful of Jewish families for the past 10 years. The area earmarked for the project is an empty half-acre plot purchased a quarter of a century ago by a subsidiary of the Jewish National Fund from the White Russian Church.

In recent years, the Antiquities Authority has held archeological digs at the site, and has uncovered artifacts from the Second Temple period (536 BCE - 70 CE) and clay pottery from the First Temple period (1006-586 BCE). It is also known that on or near the site, Jews and Moslems fought together against the invading Crusaders. Until 120 years ago, there was a small Jewish presence at the site. The famed Jerusalem historian, Pinchas Grayevski, wrote in his chronicles about the last Jewish resident of the site, Rachel Green.

The last housing minister to push plans for a new Jewish neighborhood on the site was Ariel Sharon in the early 1990s. His plan for 200 housing units was shot down, however. After Haim Karman, a student at a yeshiva in the Old City, was stabbed to death by a Palestinian, the Ateret Cohanim group attempted to establish a Jewish presence at the site, but the local planning authorities blocked the move.

The plans for the neighborhood are being drawn up by architects Saadia Mandell and Errol Pecker, and the ministry's project manager is Eliezer Avni. The plans are nearing completion, and may be presented to the municipal planning authority within two or three months.

If the project goes ahead, the Jewish presence in the Old City outside the Jewish Quarter will increase by 50 percent. There are some 60 Jewish families currently residing in the Christian and Moslem Quarters. All Jewish projects in the Old City of Jerusalem, but outside the Jewish Quarter, are funded by organizations such as Ateret Cohanim, which are dedicated to "redeeming" homes and land in the Old City of Jerusalem. Some 3,500 Jews currently reside in the Old City, around 10 percent of the total population. Most of them live in the Jewish Quarter.