Hundreds of Israeli settlers stormed into a Palestinian town in the occupied West Bank on Wednesday, setting fire to dozens of cars and homes to avenge the deaths of four Israelis killed by Palestinian gunmen the previous day, residents said. Palestinians said one man was killed in the violence.

In further violence, an Israeli drone attacked a Palestinian car in which suspected Palestinian gunmen were travelling in the northern West Bank. The late-night attack marked an escalation in Israel's ongoing campaign against militants in the area.

The identities of the people on board were not immediately known. But the army said it had “identified a terrorist cell inside a suspicious vehicle” that had been responsible for a number of recent shooting attacks on Jewish settlements.

The settler attack came as the Israeli military deployed additional forces in the occupied West Bank, and Prime Minister Benjamin Netanyahu announced plans to build 1,000 new settler homes in response to the deadly shooting.

The moves threatened to further raise tensions after days of deadly fighting in the West Bank that included a daylong Israeli military raid in a Palestinian militant stronghold and Tuesday's mass shooting.

Palestinian residents and human rights groups have long complained about Israel's inability or refusal to halt settler violence. In Wednesday's rampage, residents in Turmus Ayya said some 400 settlers marched down the town's main road, setting fire to cars, homes and trees.

Mayor Lafi Adeeb said some 30 houses and 60 cars were partly or totally burned, and that the attacks intensified even after the Israeli army arrived. At least eight Palestinians were hurt during the clashes, which the army tried to disperse by firing rubber bullets and tear gas.

Palestinian medical officials said one man — identified as 27-year-old Omar Qatin — was killed by army fire and two other people were wounded. Residents said Qatin was a father of two small children and worked as an electrician for the local municipality.

Israeli police said they opened fire when residents threw rocks and fireworks toward them. It said one officer opened fire after believing his life was in danger, hitting a “rioter.” But Palestinian residents disputed the account.

“He was just standing there, innocent, he is such a kind-hearted kid. He had no stones, he was totally unarmed, he was at least half a mile (one kilometer) away from the military,” said Khamis Jbara, his neighbour. “He works from 6am to 6pm. He is a peaceful man.”

Palestinian residents of the town, known for its large number of American citizens, were seething and in shock after the attack.

Streets were littered with broken pots, uprooted trees, charred yard furniture and skeletons of cars. At least one house was completely torched, the living room blackened, the furniture burned to ashes.

“It was terrifying, we just saw mobs of people in the streets, masked, armed,” said Mohammed Suleiman, a 56-year-old Palestinian-American who lives in Chicago and was visiting his hometown. He said his brother, who is currently in Chicago, owns one of the burned houses.

Suleiman blamed the Israeli military, saying the soldiers turned their guns on the Palestinian residents instead of the vandals marching into the town with guns and firebombs, throwing fuel oil and setting alight everything in their path. The army was "literally clearing the way for them,” he said.

Abdulkarim Abdulkarim, a 44-year-old resident of Ohio, said his family's four cars were burned and house damaged. “They call us terrorists but here you have terrorism supported by the government,” he said.

In the home of the Shalaby family, eight children hid on the third floor when they saw a mob of masked settlers slash tires and throw fuel on three cars. Within moments, their front yard erupted into a giant fireball. At least one of the armed settlers burst through the front door, trashing the sunroom and breaking windows.

“I just kept thinking I was going to die,” said 15-year-old Mohammed Awwad, an American citizen from northern California who was visiting his grandparents. He was removing pieces of glass from his foot as his family packed up their valuables to take to an aunt's house in the hills, fearing the settlers' return.

Turmus Ayya, a town with luxurious villas with gardens and views of rolling olive groves, is frequently a target of settler attacks from the nearby Shilo settlement. Tayem Abu Awwad, whose old car was torched in a separate attack last week, said his brand new Toyota was charred in Wednesday's rampage.

The Israeli military said it sent forces into the town “to extinguish the fires, prevent clashes and to collect evidence.” It said the settlers had left the town, and Israeli police opened an investigation.

The military condemned “these serious incidents of violence and destruction of property," adding that settler violence prevents it from carrying out its “main mission” of protecting national security and battling militants.

The settler attack brought back memories of a rampage last February in which dozens of cars and homes were torched in the town of Hawara following the killing of a pair of Israeli brothers by a Palestinian gunman.

Palestinian Prime Minister Mohammad Shtayyeh visited Turmus Ayya to inspect the damage. Local criticism of the Palestinian Authority has intensifies over its weakness in the face of settler attacks.

As he spoke, expressing solidarity with the residents and appealing to the United States to intervene — given the high percentage of American citizens in the town — one resident shouted at him that “no one should have to bear what we went through” and demanded the authority “do more to protect its people.”

Egypt and Jordan, the first two Arab countries to make peace with Israel, both condemned the settler violence and called for an immediate end to the attacks.

Netanyahu criticised the settler violence, as well as unrelated protests by Druze Arabs in the Golan Heights that turned violent.

“We will not accept any provocations to the police or the security forces in these places or anywhere else,” he said. “We are a nation of laws.”

Tuesday's shooting in the settlement of Eli came a day after seven Palestinians were killed in a battle against Israeli troops in the militant stronghold of Jenin. The worsening violence has created a test for Israel's government and prompted calls for a widespread military operation in the West Bank.

As Israel deployed more forces to the area, Netanyahu said he had approved plans to build 1,000 new homes in Eli. “Our answer to terror is to strike it hard and to build our country,” he said.

The international community opposes settlements on occupied lands sought by the Palestinians for a future independent state. Netanyahu's far-right government is dominated by settler leaders and supporters.

Israeli media identified the four killed in the shooting as Harel Masood, 21, Ofer Fayerman, 64, and Elisha Anteman, 18, Nahman-Shmuel Mordoff, 17. An Israeli civilian killed one assailant at the scene, while Israeli troops chased and killed the second shooter after he fled.

Meanwhile, the Palestinian death toll from Monday's army raid in Jenin rose to seven after 15-year-old Sadeel Naghniyeh succumbed to wounds sustained in the gunbattle, Palestinian officials said. Some 90 Palestinians, and eight Israeli soldiers were also wounded in the shootout.

The long string of violence in the region over the past year and half shows no sign of relenting. At least 130 Palestinians and 24 people on the Israeli side have been killed so far this year, according to a tally by The Associated Press.

Israel says most of the Palestinians killed were militants, but stone-throwing youths protesting the incursions and others not involved in confrontations have also been killed.

Israel captured the West Bank, along with east Jerusalem and the Gaza Strip, in the 1967 Mideast war. The Palestinians seek those territories for a future independent state.