Christian worshippers have thronged the Church of the Holy Sepulchre in occupied East Jerusalem to celebrate the ceremony of the Holy Fire, an ancient ritual that sparked tensions this year with the Israeli police.

In the annual ceremony observed for more than a millennium, a flame taken from Jesus’s tomb in the church is used to light the candles of believers in Greek Orthodox communities. The devout believe the origin of the flame is a miracle and is shrouded in mystery.

On Saturday, after hours of anticipation, a priest reached into the dim tomb and ignited his candle. Worshippers passed the light to one another, turning to their neighbour to allow them to light a candle from theirs. Little by little, the darkened church began to glow as the tiny patches of light merged to eventually illuminate the whole building.

Bells rang out. “Christ is risen!” the multilingual worshippers shouted. “He is risen indeed!”

Many in the church – built on the site where Christian tradition holds that Jesus was crucified, buried and resurrected – were thrilled to mark Orthodox Easter week in Jerusalem. But for the second consecutive year, Israel’s strict limits on event capacity crushed the hopes of other Christians.

Israel has capped the ritual at 1,800 people with Israeli police saying they must be strict because they are responsible for maintaining public safety.

But Jerusalem’s minority Christians fear Israel is using the extra security measures to alter their status in the Old City, providing access to Jews while limiting the number of Christian worshippers.

The Greek Orthodox patriarchate has lambasted the restrictions as a hindrance to religious freedom and called on all worshippers to flood the church despite Israeli warnings.

As early as 8am (05:00 GMT), Israeli police were turning back most worshippers from the gates of the Old City, including tourists who flew from Europe and Palestinian Christians who travelled from across the occupied West Bank. They directed them instead to an overflow area with a livestream.

Angry pilgrims and clergy jostled to get through while police struggled to hold them back, allowing only a trickle of ticketed visitors and local residents inside. More than 2,000 police officers swarmed the stone ramparts.

After the ceremony, Palestinian Christians carried the Holy Fire through the streets and lit the tapers of worshippers waiting outside. Chartered planes will ferry the flickering lanterns to Russia, Greece and beyond.

The dispute over the church capacity has erupted as Christians in the Holy Land, including the head of the Roman Catholic Church in the region as well as local Palestinians and Armenians, say the most right-wing government in Israel’s history has empowered hardline Jews who have escalated their vandalism of religious property and harassment of Christian clergy.

Israel said it is committed to ensuring freedom of worship for Jews, Christians and Muslims.