A political battle over a Muslim cemetery in Jerusalem that began with charges of insensitivity levelled at plans for building on the site has spread into a more curious fight about whether hundreds of nearby tombstones are even real.

The Mamilla cemetery had its peace disturbed this month by Israeli bulldozers demolishing gravestones in the middle of the night and by Muslim protests. The once sleepy plot of Muslim gravestones in Jewish west Jerusalem has become a flash point for rival claims to the holy city at the heart of the Israeli-Palestinian conflict.

Since early this year, activists from Israel’s Islamic Movement have been cleaning and restoring graves at the cemetery, where tradition says famous Islamic scholars are buried beside warriors who fought the Crusaders alongside Saladin.

But Israeli authorities say the activists went beyond restoration and manufactured hundreds of graves in a political attempt to cement their hold on the site.

In August, municipal crews arrived at night with power shovels and erased about 300 low, coffin-shaped tomb markers that Israeli officials and archaeologists say were fake and contained no human remains.

The Islamic Movement protested. “The graves are not empty and the graveyard is not fake as they claim,” said Nuha al Qutob, 35, who attended a mid-August demonstration. She said her grandfather was buried nearby.

The cemetery first drew attention in 2004 with the beginning of work on the Museum of Tolerance. Undertaken with the stated goal of promoting coexistence, the museum is a project of the US-based Simon Wiesenthal Centre, a Jewish organisation named for a famous Nazi hunter.

A century ago, the cemetery was a rural plot sprawling outside the walls of Jerusalem’s Old City. Today it is hemmed in by luxury hotels, a high-end shopping mall and a cluster of clubs and bars. Some of the unused cemetery’s land was rezoned by Israel in the 1950s and 1960s, with part becoming a park and one corner a municipal parking lot.

The tolerance museum turned into a public relations debacle when it became clear that the plot of land slated for its construction, the parking lot, contained human remains.

The cemetery has not shrunk since the 1960s and Israel denies that any more land will be rezoned. But Muslim activists fear parts of the plot, which is already a fraction of its original size and includes land with no visible graves, will be severed and consumed.

When the attempts to block the museum in Israeli courts failed in 2008, the Islamic Movement began concentrating its efforts on the rest of the cemetery, outside the security-camera-mounted aluminum walls of the museum construction site.

The movement began bringing in volunteers and contractors to clean up the land and restore the graves with the city’s permission, investing about $100,000 (Dh370,000), according to Mahmoud Abu Atta, a foundation spokesman.

A few months passed, Israeli officials said, before they noticed a dramatic increase in the number of graves. A pathway that city gardeners regularly used with their pickup truck was suddenly blocked by headstones, and a row of gravestones mysteriously appeared over an underground sewage line and on top of one manhole cover, according to Shlomo Chen, an inspector with the Israel Lands Authority in charge of the graveyard.

By August, city crews began arriving at night to demolish the gravestones. Restored graves that the city deemed genuine were left untouched.

“It is important to note that this is one of the biggest frauds perpetrated in recent years, and its sole goal was to illegally take over state land,” the Jerusalem municipality said.

The new gravestones, typically constructed with old stones set in fresh concrete, also scrambled the physical record at an important historical site, according to the Israel Antiquities Authority, which termed the graves “fictitious”.

The Islamic Movement’s Abu Atta said all of the markers were constructed atop genuine graves, though in some cases nearly nothing was left of the original. He also indicated that the precise location of the graves was beside the point.

“If you dig a few metres down anywhere here you’ll find bones,” he said. “We just want to guard the cemetery.”

The irony of a Jewish-sponsored Museum of Tolerance going up partly on a Muslim graveyard has made the project an irresistible target for critics. Legal action by the Islamic Movement and other groups snarled the project for years.

The 2008 Supreme Court ruling in the museum’s favour noted that in Israel, where there are more archaeological sites per square mile than in any other country in the world, buildings are often built on graves.

And when the British ruled the city before 1948, it emerged, the local Islamic leaders at the time granted a religious dispensation to move graves in the cemetery to clear the way for a business centre, hotel and park.