Israeli soldiers shot dead two Palestinians at Qalandiyah refugee camp, north of Jerusalem, early Monday morning, medical officials and witnesses said.

Witnesses and the Israeli military said the incident occurred as soldiers entered the camp shortly after midnight on a "search and arrest" operation. Their entry into the camp sparked rioting, with residents throwing rocks and bottles at them.

The witnesses said the soldiers opened fire "indiscriminately," immediately killing Mutasem Awad, 22, a law student at a local university, who was shot in the head, and Ali Khalifeh, 23, member of the Palestinian military intelligence, who was shot in the stomach and died on his way to hospital in Ramallah. A third person was injured in the back but reported stable.

The soldiers left the camp after the incident, arresting a number of residents. The Israeli military said five soldiers were lightly injured by the rock-throwing.

Residents said that Israel brought up reinforcements to a military checkpoint south of the camp between Jerusalem and Ramallah, as camp residents prepare to bury the dead. Clashes are expected to follow the funeral.

A spokesperson for Palestinian President Mahmoud Abbas condemned the killing, stating that it was an "Israeli attempt to create an atmosphere of escalation ahead of September".

The raid came as Palestinians mark the first day of the holy fast month of Ramadan.