Israeli police have accompanied bulldozers into the Arab neighbourhood of Beit Hanina in East Jerusalem where they demolished two homes.
The Jerusalem municipality said the houses had been built without proper planning permission and their demolition had been ordered by the district court.
An angry crowd gathered outside the houses on Tuesday morning, but a large police presence prevented any trouble.
Jerusalem municipal authorities regularly order the demolition of what they claim are illegally built structures, but this invariably happens in Arab neighbourhoods.
Planning and building code violations in Jewish areas are generally punished with fines.
