A fire broke out overnight Sunday at the office of an Israeli NGO that champions human rights in the occupied Palestinian territories, a spokeswoman for the organisation said, with arson cited as a possible cause.

The blaze extensively damaged the Jerusalem office of the group B'Tselem but there were no injuries as the premises were empty at the time, the spokeswoman said in a statement.

"A fire broke out at B'Tselem's office in Jerusalem this evening. None of our staff were in the building," she said.

"Initial reports published by the media indicate that police suspect arson," she added.

"If it is discovered that this was an arson attack, it must be seen in the context of the wave of government incitement and smear campaigns against Israel's human rights groups, and B'Tselem in particular."

But she said the fire would not stop the organisation's work of documenting and exposing human rights abuses under the occupation.

Speaking on public radio, a representative for the fire service did not rule out the possibility of arson.

He confirmed the premises had been seriously damaged but no one injured.

Israeli Prime Minister Benjamin Netanyahu launched what was seen as a crackdown on leftwing NGOs in December with contentious draft legislation to toughen rules on rights groups receiving funds from abroad.

Left-wing NGOs described the move as a witch-hunt.