JERUSALEM, Feb 26 (Reuters) - Palestinian President Mahmoud Abbas accused Israel on Sunday of trying to erase any Arabic identity from Jerusalem, drawing a strong response from Israeli Prime Minister Benjamin Netanyahu, who criticized the comments as inflammatory and contemptible.

Abbas, speaking at a conference in Qatar, said that for the past few years Israel has been waging a final battle aimed at erasing the Arab, Muslim and Christian character of East Jerusalem, which Israel captured from Jordan during the 1967 Middle East war.

Netanyahu called the Palestinian leader's remarks a harshly inflammatory speech from someone who claims that he is bent on peace.

(Abbas) knows full well that there is no foundation to his contemptible remarks, Netanyahu's office said in a statement.

The strong words from both sides underscore how much the holy city has been a sticking point in Israeli-Palestinian peace talks that have made little progress in recent years.

The Palestinians want East Jerusalem as the capital of a future state they are looking to establish in the West Bank and Gaza Strip.

Netanyahu, who opposes dividing the city, said that Jerusalem has been the eternal capital for the Jewish people for thousands of years. He said that Israel will continue to maintain the city's holy sites and freedom of worship for all.

Abbas said that through settlement building in the West Bank and Jerusalem, Israel is carrying out an ethnic cleansing, in every sense against the Palestinian residents in order to turn them into minorities in their own city.

Tensions are often high in Jerusalem and surroundings. Israeli police clashed with Palestinian stone throwers last week in the West Bank and at al Aqsa mosque in the Old City. (Reporting by Jihan Abdalla, Roleen Tafakji and Ari Rabinovitch)