Israeli forces have killed two Palestinians in clashes in the occupied West Bank and a third in Jerusalem after he opened fire at a police officer, hours after a car-ramming attack elsewhere in the city wounded 12 Israeli soldiers.

Tensions have soared following last week’s release of US President Donald Trump’s Middle East initiative, which greatly favours Israel and was rejected by the Palestinians.

The violence put the plan on even shakier ground and raised fears of another extended round of fighting in the decades-old conflict.

The plan would allow Israel to annex all of its settlements and large parts of the occupied West Bank – sparking calls from Israeli nationalists to do so immediately.

Jerusalem scene
There has been an increase in violence in the region (Mahmoud Illean/AP)

In return it would grant Palestinians limited autonomy in scattered enclaves surrounded by Israel, but only if they met nearly impossible conditions.

The Trump plan “created this environment of tension and escalation”, Nabil Abu Rdeneh, a spokesman for Palestinian President Mahmoud Abbas, told the official Palestinian news agency, WAFA.

The violence began early on Wednesday, when a Palestinian motorist slammed his car into a group of Israeli soldiers, wounding 12 before fleeing the scene, the Israeli military said.

In the West Bank, two Palestinians were killed in clashes with Israeli troops, Palestinian hospital officials said.

Later, Israeli police said they shot and killed an Arab citizen of Israel who opened fire at forces in Jerusalem’s Old City, lightly wounding an officer.

Israeli military spokesman Lt Col Jonathan Conricus said one of the 12 injured soldiers in Jerusalem was seriously hurt and the others were lightly injured.

Israeli police spokesman Micky Rosenfeld said the incident was being treated as a “terror attack” and said Israeli forces were searching for the assailant.

Palestinian hospital officials said a 19-year-old was killed in clashes in the West Bank city of Jenin.

Six others were wounded in the confrontation.

In a separate incident in Jenin, a member of the Palestinian security forces was shot and killed by Israeli troops.

On Wednesday, Israeli forces shot and killed a 17-year-old Palestinian during clashes with demonstrators elsewhere in the West Bank.

Lt Col Conricus said Israeli forces are “not trying to escalate the situation while understanding the complexity and sensitivity of the situation”.

He stopped short of linking the violence to Mr Trump’s Middle East proposal.

In the first Jerusalem incident, the troops were out on a late-night “educational heritage tour”, walking near a popular entertainment district in Jerusalem when the motorist rammed his car into them and fled.

While it did not claim responsibility for the attack, the Islamic Jihad militant group praised the car ramming as “the beginning of a new confrontation over Trump’s plan”.

Israeli Prime Minister Benjamin Netanyahu vowed to have the assailant apprehended.

“It’s just a matter of time – and not much time,” he said in a statement.