Israel has frozen co-operation with the UN's cultural agency, accusing it of denying Judaism's connections to the religion's holiest sites.
Its education minister said a Unesco draft decision concerning Jerusalem "denies history and encourages terror".
It comes after the body approved a text which repeatedly used only the Islamic name for a hilltop complex which is also the holiest site in Judaism.
The site is known to Jews as the Temple Mount and Haram al-Sharif to Muslims.
The draft decision, submitted by several Arab countries, criticises Israel's activities at holy places in Jerusalem and the occupied West Bank.
While acknowledging the "importance of the Old City of Jerusalem and its walls for the three monotheistic religions", the document refers to the sacred hilltop only by the name "al-Aqsa Mosque/al-Haram al-Sharif" (Noble Sanctuary).
It is the location of two Biblical Jewish temples and is flanked by the Western Wall, venerated by Jews as part of the original supporting wall of the temple compound.
Haram al-Sharif is also the place where Muslims believe the Prophet Muhammad ascended to Heaven, and is the third holiest site in Islam.
The draft refers to the precinct in front of the wall as "al-Buraq Plaza 'Western Wall Plaza'" - placing single quote marks only around "Western Wall", giving the name as it is known to Jews less weight than the one by which it is known to Muslims.
The stated aim of the text was "the safeguarding of the cultural heritage of Palestine and the distinctive character of East Jerusalem".
It repeatedly denounced Israeli actions, including the use of force, imposition of restrictions on Muslim worshippers and archaeological work. Israel regards such criticism as politically motivated.
The draft text was passed at committee stage by 24 votes in favour, six against, and 26 abstentions. Two countries were absent. It will now be submitted to Unesco's executive body, which will vote on whether to adopt it.
Israeli Education Minister Naftali Bennett said Unesco was ignoring "thousands of years of Jewish ties to Jerusalem" and aiding "Islamist terror".
Unesco chief Irina Bokova criticised the draft resolution, saying "different peoples worship the same places, sometimes under different names. The recognition, use of and respect for these names is paramount."
However, Mr Bennett said Ms Bokova's statement was insufficient. "Words are important, but they are not a replacement to the actions of the organisation she heads," he said.
Israeli Prime Minister Benjamin Netanyahu said in a Facebook post that Unesco had become a "theatre of the absurd" in taking "another delusional decision".
"To say that Israel has no connection to the Temple Mount and the Western Wall is like saying that China has no connection to the Great Wall of China or that Egypt has no connection to the pyramids. By this absurd decision, Unesco has lost what little legitimacy it had left."
The move was also condemned by Jewish organisations around the world, including the World Jewish Congress, which called it an "inflammatory, one-sided decision".
However Palestinians, who seek an independent state in the West Bank and Gaza, welcomed the measure.
"This is an important message to Israel that it must end its occupation and recognise the Palestinian state and Jerusalem as its capital with its sacred Muslim and Christian sites," said Nabil Abu Rdainah, a spokesman for Palestinian President Mahmoud Abbas.