A mosque was set alight in a suspected arson attack in the occupied West Bank on Tuesday and the name of an Israeli vigilante group called "price tag" was found scribbled on an outside wall, Palestinian officials and witnesses said.

Israeli police said they were investigating the incident, which took place in Aqraba, a village east of Nablus.

Residents told Reuters they noticed smoke coming from the building before dawn and rushed to douse the flames, which damaged a carpet and blackened one of the walls.

"If we hadn't rushed to put out the fire the entire building could have gone up in flames," said Maher Fares, a villager.

Ghassan Daghlas, a Palestinian official from the Nablus area, said he suspected Jewish settlers in the area had carried out the attack. The settlement of Itamar is about 4 km (2.2 miles) north of Aqraba.

"They broke a window and threw a firebomb into the mosque which burned the carpet," Daghlas said.

Hebrew script reading "price tag" had been scrawled on the outside of the mosque, a Reuters cameraman said.

The "price tag" group has carried out scores of attacks on Palestinian, Israeli Arab, and church property in the West Bank and inside Israel since 2008. The group says it aims to exact a price for any opposition to settlement building.

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