Masked Israeli settlers hurl petrol bombs in attack on West Bank village of Jit

Video on social media showed cars and houses on fire in Jit, near the city of Nablus.

Israel's military said petrol bombs and rocks were thrown at buildings and vehicles and that it used "riot dispersal means" to end the violence.

It said one Israeli had been arrested after police and army units intervened in Thursday's attack.

The Palestinian health ministry reported one person had been killed and another wounded by settlers' gunfire.

Prime Minister Benjamin Netanyahu and the White House both condemned the attack.

A statement from Mr Netanyahu's office said he viewed the incident with "utmost severity" and anyone "responsible for any crime will be caught and prosecuted".

The US and European countries have consistently urged Israel to do more to stop the attacks.

"Israeli authorities must take measures to protect all communities from harm, this includes intervening to stop such violence, and holding all perpetrators of such violence to account," said a statement on Thursday from the White House National Security Council.

More than 600 Palestinians have been killed by Israeli fire in the West Bank since the start of the Israel-Hamas war.

These have mostly been during military raids into towns and cities to arrest or kill militants - but civilians are often caught in the crossfire.

Israel accuses Iran of sending money into the West Bank to incite further violence against Israelis.

It also gave approval earlier this year for 3,400 new settlement homes to be built, even though they are illegal under international law.

Israel captured the West Bank, East Jerusalem and the Gaza Strip in the Six-Day War in 1967. All three areas are sought by the Palestinians for an independent state.

Israel, however, considers the West Bank disputed territory and retains control of most of it.

Dozens of masked Jewish settlers descended on the West Bank village of Jit and went on the rampage, torching homes, some with families still inside, and cars. They opened fire on villagers, say Palestinians, and were brandishing knives.

The attack could not come at a worse time in the middle of make-or-break talks over a ceasefire in Gaza.

The Israeli military says it was on the scene quickly but - from what we have seen from video taken at the time - not before a lot of damage was done. The village was literally set ablaze.

This is the latest in a series of settler attacks on Palestinian villages that seem to be increasing in severity.

The IDF says it's investigating but in reality these attackers can act with impunity, very few are ever brought to justice.

The Israeli government has condemned the attack, but critics say extremist Jewish settlers are emboldened by some of them being appointed to high office within that government, running key departments like national security.

Its minister, Itamir Ben Gvir, is an extremist with a long list of convictions for anti-Arab racism and membership of extremist organisations.

This is the second time Jewish extremists have inflamed tensions in what is a crucial week.

Ben Gvir led a group of supporters on a provocative tour of the Temple Mount in Jerusalem on Tuesday that threatened the status quo over its use.

His own government was forced to reprimand him. His dangerous antics were roundly condemned by Israel's allies. Ben Gvir and his movement are opposed to the creation of a Palestinian state.

They claim all of the land occupied by Israel as Jewish by divine right. They want the war in Gaza to go on and the Strip to be reoccupied.

Scenes of Jewish settlers inflaming tensions in the most sensitive site in the conflict - and now rampaging on the West Bank - play into the hands of Israel's enemies. They show there are extremists on both sides trying to scupper the chances of peace.

Gaza's health ministry said on Thursday that more than 40,000 Palestinians had been killed in the war.

The conflict started after about 1,200 people were killed and many others taken hostage in the Hamas terror attack last October.

Fresh ceasefire talks are currently under way in Doha, with Qatar and Egypt acting on behalf of Hamas.

Previous efforts to end the fighting have failed, apart from a brief pause when some hostages and prisoners were exchanged in November.

-SKY NEWS