The New Palm Hostel.
The New Palm hostel is not really recommended by Little Jerusalem, but it is by far the cheapest hostel to stay at when it comes to housing in Jerusalem. Located behind a vegetable stall, right outside of the Old city's Muslim Quarter's Damascus Gate.
New Palm Guest House (also known as New Palm Hotel and Hostel) offers both several sized suite rooms with breakfast options as well as communal hostel (mixed or female only) rooms. From dorm settings to rooms specifically made for families, any individual or group on a budget can find a suitable room here.