More than 300 olive trees were uprooted and two cars set alight in the West Bank village of Hawara in the early hours of Wednesday morning.

Stars of David and the word 'Mohammed,' as well as racist slogans, were also sprayed in Hebrew across the town, including on the walls of a mosque.

A military official told Army Radio that the army suspected settler violence against Palestinians, part of some settlers' policy of imposing a 'price tag' on a government order to freeze Israeli construction in the West Bank.

As part of the strategy, settlers from nearby Yitzhar have launched numerous attacks on Palestinians, including an arson attack on a mosque in December 2009.

Responding to news of the incident, Itamar Ben-Gvir, a spokesman for the right-wing Jewish National Front party, said:

"We are talking about a hostile village that has been the source of a large number of violent attacks against the residents of Yitzhar."

He added: "The time has come for the Arabs to understand that Jews are not suckers and that Jewish blood will not be shed without consequence."

The Israel Defense Forces condemned the attacks, promising to investigate and bring the attackers to justice. Shin Bet, the security service, will also open an inquiry into the incident, Haaretz has learned.

"The IDF conveyed a message to the Palestinians through the Civil Administration [which governs Israeli-controlled parts of the West Bank]to reassure them that the IDF takes the matter of harming or vandalizing of holy sites very seriously," the army said in a statement.

"It should be noted that the Civil Administration erased the graffiti this morning."

Tensions between Hawara residents the nearby settlements of Yitzhar have flared in recent weeks after two settlers were wounded when stones were thrown at them, one suffering permanent neurological damage.