A Palestinian gunman critically wounded an Israeli municipal officer in commercial hub Tel Aviv on Saturday, before being fatally shot by another officer, authorities said.

The attack comes amid a surge in violence in the Israeli-Palestinian conflict and a day after a 19-year-old Palestinian was killed by Israeli settlers in the occupied West Bank.

Tel Aviv police said a gunman had opened fire at a municipal inspector in the city centre, who according to the Magen David Adom emergency service was taken to hospital "in critical condition".

"Another municipal inspector responded swiftly and managed to neutralise the terrorist," police said, adding that "significant police forces are present at the scene".

The Palestinian assailant was taken to hospital where officials later pronounced him dead.

Israel's Shin Bet domestic security service identified the gunman as Kamal Abu Bahar, 22, originally from the Jenin area, the site of frequent violence in the northern West Bank.

Prime Minister Benjamin Netanyahu paid tribute to the "vigilance" of municipal officers which had helped "avert a far more serious attack".

The violence this year linked to the Israeli-Palestinian conflict has killed at least 208 Palestinians, 27 Israelis, one Ukrainian and one Italian, according to an AFP tally compiled from official sources on both sides.