President Shimon Peres denied Wednesday that the government has any intention of dividing Jerusalem, saying no Israeli would divide the city, Israel Radio reported.

According to the radio, Peres said that in any event the city's holy sites must remain under Israeli sovereignty, adding that the capital must remain united, with a strong Jewish majority and security for its inhabitants.

The president was quoted by the radio as saying that, to the best of his knowledge, there is no agreement on the divisive issue. Peres made the comments during a visit to the Galilee town of Safed.

Strategic Affairs Minister Avigdor Lieberman also addressed Wednesday that Jerusalem issue, reiterating his stance that Israel does not need to retain sovereignty over certain parts of the city, in the context of future a peace agreement.

"There is no reason for us to finance refugee camps like Shoafat, and they should be transferred to Palestinian control," he said.

While touring the City of David in the capital along with fellow Yisrael Beiteinu members, Lieberman said Israel was making mistake in not continuing its construction in the area of Jerusalem, regardless of American pressure.

On Monday, Likud officials urged Shas and Yisrael Beitenu to quit the government over its intention to divide Jerusalem.

Earlier in the day, Olmert had questioned whether Arab neighborhoods in East Jerusalem should be defined as part of Israel's capital.