A Palestinian killed three Israelis in the occupied West Bank on Tuesday, stabbing two men to death and knifing several others, then killing another with a stolen car before being shot dead himself, officials said.

The deadly rampage came hours before Israel swore in its new parliament, with far-right lawmakers poised to be members of the cabinet vowing a crackdown on Palestinian violence.

The Israeli army reported a "stabbing attack" near the Ariel Industrial Zone in the northern West Bank.

Ariel is one of the largest Israeli settler communities in the occupied Palestinian territory.

"A terrorist arrived at the entrance gate of the zone and stabbed civilians in the area," a statement from the army said.

Israeli emergency medical service Magen David Adom said a 35-year-old man died from a stab wound, while a second man, who was critically wounded, died at the scene. Two other people sustained serious stab wounds.

The attacker then headed to "a nearby gas station and stabbed additional civilians," the army said, and stole a car and fled.

"The terrorist fled the gas station by driving a stolen vehicle... committed an intended car accident and rammed an additional civilian," the statement said.

The emergency service said a 50-year-old was killed as a result of the car ramming, and another man stabbed on the highway was taken to hospital in a serious condition.

The army said a soldier then "neutralised" the attacker, adding that troops had launched a manhunt for a second individual suspected of involvement.

The Palestinian health ministry identified the Palestinian shot dead by Israeli forces as Mohammed Souf, 18, without providing further details.

An AFP journalist reported that the army had raided Souf's home in Haris, a village near Ariel.

'Despicable'

Violence in the West Bank has soared since March, as Israel has launched near daily raids in response to a series of deadly attacks on Israelis.

On Monday, Israeli troops shot dead Palestinian teenager Fulla al-Masalma the day before she would have turned 16, saying that she had sped towards them at the wheel of a car.

Outgoing Israeli prime minister Yair Lapid sent his condolences to the bereaved families of Tuesday's attack victims, and said that while security forces have managed to dismantle large militant infrastructures, "we have to fight this battle every day anew."

The November 1 election saw Lapid and his allies lose their majority in parliament, with former premier Benjamin Netanyahu and his partners securing 64 of the 120 seats.

Bezalel Smotrich, co-leader of the far-right Religious Zionism party, which is set to become a key partner in the coalition Netanyahu is putting together, said the attack was a "painful reminder to the most urgent topic on our table."

"We must bring back security to all Israelis," he said on Twitter.

European Union ambassador to Israel Dimiter Tzantchev condemned the "despicable ramming and stabbing attack", sending his condolences to the families of the dead.

Israel has occupied the West Bank since the Six-Day War of 1967.

About 475,000 Jewish settlers currently live in the West Bank in communities considered illegal by most of the international community, alongside some 2.9 million Palestinians.