Search underway for suspects after fatal West Bank shooting of Israeli rabbi

The Israeli military set up roadblocks, cordoned off Palestinian villages and deployed reinforcements to the West Bank on Wednesday, a day after an Israeli settler was killed in a drive-by shooting by suspected Palestinian gunmen.

Israeli troops have combed villages around the city of Nablus searching for the suspects in Tuesday's attack near the Havat Gilad settlement, a military statement said.

Raziel Shevah, described in local media reports as a rabbi, was shot multiple times from a passing vehicle and was hospitalized in critical condition. The 35-year-old later died of his wounds.

Israeli Prime Minister Benjamin Netanyahu issued a statement vowing Israel's security services "would do everything possible in order to apprehend the despicable murderer."

The attack took place near Havat Gilad, an unauthorized Israeli settlement outpost near Nablus. The isolated community of a few hundred Israelis is located deep inside the West Bank.

Defence Minister Avigdor Lieberman called for the unauthorized outpost to be retroactively recognized in response to the attack.

The Palestinian Islamic militant group Hamas praised the shooting as "heroic" but did not claim the attack.

U.S. Ambassador to Israel David Friedman responded to Tuesday's attack on Twitter, writing that Shevah was "killed last night in cold blood by Palestinian terrorists."

"Hamas praises the killers and PA laws will provide them financial rewards. Look no further to why there is no peace," Friedman said.

The PA refers to the Western-backed Palestinian Authority, which governs autonomous zones within the West Bank but has no authority in the 60 per cent of the territory known as Area C, where settlements are located.

Some funeral mourners yell 'revenge'

Israel has long unsuccessfully pushed for the Palestinians to halt the "martyrs' fund" payments to roughly 35,000 families of Palestinians killed and wounded in the conflict with Israel, including suicide bombers and other militants, arguing that the practice encourages violence.

The UN Mideast peace envoy Nickolay Mladenov also condemned the killing.

"There is no justification for terror and those who condone it, praise it or glorify it. This is not the path to peace!" he tweeted.

Hundreds attended Shevah's funeral at Havat Gilad. Some mourners yelled "revenge" at the ceremony during a eulogy by Naftali Bennett, leader of the pro-settler Jewish Home party. Bennett called on the government to officially recognize the area as sovereign Israeli territory.

Israel captured the West Bank in the 1967 Mideast war.

Some 400,000 Israelis live in settlements in the West Bank, which is home to 2.2 million Palestinians. The Palestinians claim the territory as part of their future state.

Around 200,000 Israelis live in east Jerusalem, which was also captured in the war and later annexed, and which the Palestinians seek as their capital. Some 330,000 Palestinians live in east Jerusalem.