Three Israelis have been killed and four others injured during a terror attack in a West Bank settlement.

The killer, named by the Palestinian Authority Health Ministry as 18-year-old Muhammed Souf, was shot dead by the Israeli Defense Forces (IDF) as he attempted to flee.

One person is critically wounded and three others are reportedly in serious condition.

Souf, who reportedly held a work permit that allowed him to enter Ariel settlement, reportedly stabbed an Israeli security guard at the town's industrial zone.

He then stabbed several other victims at and around a nearby petrol station.

The 36-year-old security guard was seriously hurt, the Magen David Adom ambulance service said.

Two men in their 40s who were stabbed at the petrol station were killed, while a man in his 50s was killed in a ramming attack nearby.

Unverified video footage circulating online shows the alleged terrorist running down a highway, before he is shot by Israeli soldiers.

The Palestinian Health Ministry later reported that a Palestinian man had been killed.

The IDF and Shin Bet security forces are said to be searching for an accomplice who is thought to have driven the attacker.

Souf’s father is a member of Fatah and was previously imprisoned in Israel, Ha’aretz reported.

Prime Minister Yair Lapid said: "We are fighting terror relentlessly and with the full capacity of the IDF, the Shin Bet and all security branches. 

“We have managed to dismantle infrastructure and various organizations, but this is a war we must handle every day."

Incoming Prime Minister Benjamin Netanyahu said: "I am praying for the recovery of those wounded in the devastating attack in Ariel, and backing the ongoing operation of the security forces."

Far-right politician Itamir Ben-Givr, who is thought to be in contention to become Israel’s Public Security Minister following the formation of a new government, said that terrorism “will not last”.

“We will do everything to eradicate it and restore security to the citizens of [the] State of Israel. At this difficult moment, together with all the people of Israel, I offer a prayer for the safety and fast recovery of those injured in the attack,” he added.

The attack came towards the end of a year that has seen increased levels of Palestinian terror and Israeli West Bank raids.

At least 23 Israelis and more than 130 Palestinians have been killed in the deadliest 12 month span since 2006.