Palestinian gunmen killed an Israeli couple travelling in a car with their four young children in the occupied West Bank, the Israeli army said, vowing reprisals for the "barbaric attack" amid a spike in tensions.

The couple's children, aged four months to nine years old, were lightly injured in the shooting between the Jewish settlements of Itamar and Elon Moreh and taken to hospital.

The victims were named as Eitam and Naama Henkin, both in their 30s and residents of the central West Bank settlement of Neria, near Ramallah.

They "were massacred right in front of their four children", Israeli army spokesman Peter Lerner said in a statement.

"The army has launched an operation to find those responsible for this heinous and barbaric attack."

Prime Minister Benjamin Netanyahu condemned the killings and said security services would work to "capture the assassins and also to tighten security for all Israeli citizens".

The shooting came just hours after Netanyahu offered in a speech at the UN General Assembly to "immediately resume direct peace negotiations" with the Palestinians.

Palestinian leader Mahmud Abbas on Wednesday said Israel's refusal to release prisoners and stop settlement activity was hampering fresh talks, the same day the Palestinian flag was raised at the United Nations.

Tensions have been running high between Israeli police and Palestinians at the Al-Aqsa mosque compound in Jerusalem and after a series of attacks by Jewish extremists.

Security forces closed off the area where the attack happened after Israeli television showed a group of young Israeli settlers, some hooded, had gathered to throw stones at passing Palestinian vehicles.

- 'Time to act' -

"The time for talking (with the Palestinians) is over," Israeli Education Minister Naftali Bennett thundered in a statement following Thursday's attack.

"It is time to act," he added, saying that "people whose leaders support... murder will never be a state".

Israeli Defence Minister Moshe Yaalon said security forces "will spare no efforts to arrest the killers and their sponsors".

The Palestinian militant group Hamas for its part hailed those behind Thursday's shootings.

"This operation was in response to the crimes of the Zionists," it said in a statement.

The attack came after court documents showed Israel was considering authorising wildcat settlement outposts in the West Bank near a village where a firebombing in July killed an 18-month-old Palestinian boy and his parents.

The international community regards all Jewish settlements in the West Bank as illegal, but the Israeli government makes a distinction between those it has authorised and those it has not.

Israel occupied the West Bank in the 1967 Six-Day War in a move never recognised by the international community.

Hardline Jewish nationalists see the entire West Bank as part of Israel, which refers to the territory as Judea and Samaria, the names for the ancient biblical kingdoms located there.

The last killing of an Israeli in the West Bank happened on June 29 when a settler died and three others in a car with him were wounded.

The situation is particularly tense in the northern West Bank after a Palestinian died in late September after being shot during clashes with the Israeli army that also saw another 51 Palestinians wounded.
Source: AFP