The move comes after a string of clashes in recent years between the government and the Christian minority and ahead of national polls which must be held by the middle of next year.
Malaysia bars travel to Israel but the government has previously allowed Christians to travel to the historic city regarded as holy to both Christians and Muslims.
However, according to the Christian Federation of Malaysia (CFM), the government imposed a quota of 700 pilgrims per year, with any one church only allowed to send one group of 40.
Visits were also limited to 10 days and pilgrims were only allowed one visit every three years, CFM executive secretary Tan Kong Beng told AFP Wednesday.
But a letter sent from Prime Minister Najib Razak's office to CFM president Ng Moon Hing on November 28 said these limits no longer applied save that visits could be for a maximum 21 days.
"But I think even Israel might not allow (such a long visit). We wouldn't call these concessions as it was a process of consultation," said Tan, who confirmed receipt of the letter.
However, Ng was guarded about the move, noting that in the past, "one minister can say something but things turn out differently".
"The letter should be issued from the home ministry," he added.
Najib's political secretary, Wong Nai Chee, confirmed that he signed off on the letter but did not give a reason for the move as "it is a cabinet decision and I am just relaying it to CFM".
"Taking into account the needs of Christian Malaysians, the home ministry has amended the religious pilgrimage rules to Israel," he wrote in the letter seen by AFP.
Malaysia has largely avoided overt religious conflict in recent decades but tensions have simmered since a court ruling in late 2009 lifted a government ban on the use of "Allah" as a translation for "God" in Malay-language Bibles.
The ban had been in place for years but enforcement only began in 2008.
The 2009 ruling triggered a series of attacks on Christian places of worship using Molotov cocktails, rocks and paint.
Muslims make up 60 percent of the country's 28 million people, while Christians account for about nine percent, most of whom come from indigenous groups in the Borneo island states of Sabah and Sarawak.