On August 21 1969, a lone and mentally ill Australian by the name of Michael Dennis Rohan set fire to the Al Aksa Mosque in Jerusalem. Rohan seems to have believed that he could destroy the mosque, and that this would pave the way for construction of the Jewish temple, thereby laying the groundwork for Jesus' return. The damage to the mosque was limited, though an ancient minbar (wooden pulpit) which had been there since the days of Saladin was destroyed.
Predictably, many Muslims were convinced the fire was an Israeli plot, and the subsequent trial and conviction of Rohan failed to dent this conviction. Daniel Pipes has a list of links to Arab and Muslim websites which continue to propagate this myth; here's a link to what appears to be a Palestinian (or pro-Palestinian) website which offers such a narrative even today.
The fire and the imagined threat to Al Aksa seem to have been the immediate motivation for a large Muslim convention a few weeks later, out of which grew the Organization of Islamic Cooperation (OIC), the largest international grouping after the UN.
Meanwhile Israel's cabinet had a series of meetings about the incident. The transcripts and decisions were top secret, but since they happened a long time ago, and the incitement is still ongoing, it's interesting to look behind the scenes.
The cabinet convened on the day of the fire and decided to set up a commission of inquiry with the participation of a justice of the Supreme Court; to have the army lead the efforts to maintain public peace; to ensure peaceful services in the Mosque on the coming Friday, and to publish a statement. The statement was attached to the cabinet decision, and included a condemnation of the attack, but also a demand that it not be used to incite against Jews or Israel, mentioning that there had been previous fires at the mosque, most recently under Jordanian rule in 1963.
On August 31, the cabinet decided Rohan's trial should take place as soon as possible; to delegate the discussion of the security measures on the Temple Mount to a sub-committee of ministers; and to improve the fire prevention capabilities at the Holy Places.
On the same day (August 31, 1969), the Minister's Committee on Jerusalem convened and decided that two top civil servants would meet the heads of the local churches and explain that their participation in the condemnation of "Israeli aggression" is incitement; meet the heads of the Muslim institutions and discuss the issues; and also prepare a full discussion in the cabinet of Israel's relations with the religious leaders (Muslims and Christians) in Jerusalem.
On September 25th 1969, the same committee appointed Police General Shaul Rosolio to prepare a detailed plan to secure the mosques, churches and other major holy places in Jerusalem, including the option of setting up a specific police unit for this purpose. In addition, Rosolio was to meet the Muslim authorities and determine how to re-open the gates to the Temple Mount.