The first governmental institution established in Jerusalem was the Supreme Court. The High Court decided that it would not be the body to implement the sentence "the Temple Mount is in our hands," and instead preferred to leave this to the legislators.

The first time Jerusalem was declared the capital was by David Ben-Gurion when he consecrated the Burma Road. In 1967, the Knesset passed a law protecting the holy sites of the city. In 1980, the law was passed officially declaring Jerusalem the capital of Israel. After this, many foreign representatives and embassies left the city.

The law actually establishes Jerusalem as the place where the Knesset and all other government institutions sit. During the legislation of this law, there was an opportunity to fortify the law by ruling that any change in the law be made only with the consent of all Knesset members. However, this opportunity was missed.

Three additions to the law were made – one of them being a ban on transferring control of Jerusalem to any foreign entity. 

In January 1999, during the administration of Binyamin Netanyahu, the Knesset passed a law stipulating that annulment of the coming into force of the jurisdiction and administration will be implemented only with a majority vote of 61 Knesset members. The idea of a referendum is also raised here. In other words, any change in regards to Jerusalem necessitates that a basic law be passed. However, it was also decided that these special conditions wouldn't apply to declarative changes.

In other words, any declarative change turning Jerusalem from the capital of Israel into the center of the Jewish people can be passed with a regular majority if this change is accepted by the legislators.  

Such a change won't result in a political change in the status of Jerusalem and won't create any essential change in the territory of Jerusalem.