One Israeli was lightly injured before the man was shot by a resident of the settlement, the military said.

Palestinian police confirmed the death and said they were investigating.

A 13-year-old boy was killed and a seven-year-old wounded by a Palestinian carrying an axe through the Bat Ayin settlement earlier this month.

The military wing of Islamic Jihad and Imad Mughniyeh Group was reported to have claimed responsibility for that attack.

No group has claimed responsibility for Friday's incident.

The youth, named by Palestinian police as Rabah Hejazi Sidr, 17, infiltrated the settlement which is south of the West Bank town of Hebron.

He "tried to stab a few people" before he was killed, an Israeli military spokesperson said.

Resident Uziel Shientof told Israeli media that he and a neighbour were on a security patrol when they spotted the Palestinian walking among the houses.

"My friend asked him who he was, and the man drew a knife," Uziel, who was lightly injured in the attack, said. "My friend took my gun and killed the terrorist."

Troops and police have closed nearby roads and are now searching the area.

Israeli settlements in the occupied West Bank are considered illegal under international law, although Israel disputes this.