Israel plans to revoke the media credentials of Al Jazeera TV journalists, close its Jerusalem bureau and pull the Qatar-based station's broadcasts from local cable and satellite providers, Communications Minister Ayoub Kara said on Sunday.
The closure did not appear imminent, however, and an Israeli official said a legal process was still required to implement most of the proposed steps.
The Israeli move adds further pressure on Qatar, which has been involved in a dispute with four of its Arab neighbors.
Kara said the measures were intended to bolster Israel's security and "to bring a situation that channels based in Israel will report objectively".
Al Jazeera said Kara's comments were unsubstantiated and it would take all necessary legal measures if Israel acts on its threat.
Journalists working for the pan-Arab station in Israel said they did not expect imminent moves against them.
"Al Jazeera Media Network denounces this decision, which comes in the context of a campaign that was initiated by a statement made earlier by Israeli Prime Minister Benjamin Netanyahu..." Al Jazeera said in a statement late on Sunday.
Last month, Netanyahu said he would work to shut the network's offices in Israel, accusing it of inciting violence in Jerusalem, including over an Old City site that is holy to both Muslims and Jews.