The Islamic State group on Saturday claimed responsibility for an attack in Jerusalem for the first time saying it fatally stabbed an Israeli policewoman outside the walled Old City.
"The claim by the Islamic State group is an attempt to muddy the waters", said Hamas spokesman Sami Abou Zouhri. It was the first attack in Israel or the Israeli-occupied West Bank claimed by Islamic State.
The Israeli forces said the assailants appeared to have acted independently, like numerous attackers in a wave of unrest that has rocked Israel and the occupied territories since October 2015. Local sources said the soldiers imposed a strict siege on the village.
Israel accuses the Palestinian establishment of inciting the violence, including by glorifying attackers and supporting their families.
Israeli security services have occasionally announced arrests of small cells said to be affiliated with IS, and the army has tracked the group's forces on the Syrian and Egyptian border, but the organisation has thus far not claimed a fatal attack against Israelis from the West Bank.
Police spokeswoman Luba Samri said Hadas Malka, 23, was responding to an attack nearby when a Palestinian assaulted her with a knife.
Two Palestinians were shot dead after opening fire at and trying to stab a group of Israeli police officers at one scene, police said.
Israeli authorities, meanwhile, say nearly 50 Israelis have been killed in attacks carried out by Palestinians over the same period.
A number of local and global human rights groups have raised concerns that Israeli security forces have employed a "shoot-to-kill" policy when confronting Palestinians.
Ma'an, a Palestinian news outlet, reported that Israeli police have also been conducting physical searches on Palestinians, forcing those with West Bank IDs to board special buses back to the West Bank after they are rounded up and detained.
Jerusalem is a crucial holy site for both Jews and Muslims, and has been a point of contention in the Israel-Palestinian peace process for decades.
"During Ramadan there are large numbers of (Palestinian) youths who enter without permits, they take advantage of Ramadan to be in Jerusalem", Halevy told media at the scene of the attack. One of the attackers reportedly was holding a gun, but it jammed.
The attack took place in two adjacent areas near Damascus Gate in Jerusalem's Old City.
The Old City had been crowded with tens of thousands of Muslim worshippers.
Egypt has accused Hamas of aiding the terrorists, and has kept its border crossing with the Gaza Strip largely closed.
Major General Yoav Mordechai - head of COGAT, the Israeli defence ministry agency responsible for civilian affairs in the Palestinian territories - said the family visit permits were cancelled in response to "encouragement to terrorism" by Palestinian president Mahmoud Abbas's Fatah movement.
Police shot and killed the three attackers, armed with semi-automatic weapons and knives.